Making performance - Haldor Topsoe - Annual r… · a process of searching for a suitable financial...

MakingoptimalperformancepossibleAnnual Report 2018

Topsoe is a world leader in heterogeneous catalysis, committed to helping our customers achieve optimal performance – getting the most out of their processes and products, using the least possible energy and resources.

We provide project development and investments and supply high-performance catalysts, proprietary technologies, process design, engineering, and services for use in the chemical and oil & gas industries, and we are at the forefront of developing sustainable technologies.

Our solutions address pressing global challenges by improving energy efficiency, enhancing food production for the world’s growing population, and protecting our environment

2IntRoductIon ANNUAL REPORT 2018 HALDOR TOPSOE A/S

ManagementReviewcontents

topsoe In Brief

Accomplishments & Results

ourLeadership

FinancialStatements

AuditorsReport

table of contents

Management reviewLetter from the chairman 4

Letter from the cEo 6

topsoe in brieftopsoe solutions address global megatrends 8

company snapshot 10

the topsoe ambition 11

Making optimal performance possible 12

Business model 13

Highlights 14

topsoe around the globe 16

Accomplishments and resultsFive-year summary 20

Financial report 22

outlook for 2019 23

Risk management 24

Sustainable business 27

our leadershipcorporate Governance 30

Board of directors 32

Executive committee 34

Financial statementsconsolidated financial statements of Haldor topsoe Group 38

Financial statements of Haldor topsoe A/S 80

StatementsStatement by the Executive committee and Board of directors 97

Independent Auditor's report 98

3tABLE oF contEntS ANNUAL REPORT 2018 HALDOR TOPSOE A/S

ManagementReview

topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReportContents

Contents

Haldor Topsoe delivered record results in 2018. Order intake during the year was significantly higher than in 2017. Catalyst revenue improved in 2018 in both of Topsoe’s core business areas, chemical industry and refining. Growth in the chemicals area was also driven by revenue from a number of large technology projects that were successfully completed in 2018.

The results achieved in 2018 are very satisfactory.

Investor processIn 2018, the Topsøe family – as sole owners of Haldor Topsoe A/S through Haldor Topsøe Holding A/S – took the very important decision to start a process of searching for a suitable financial partner to buy a significant minority stake in the company with a long-term intention to list the company’s shares on the stock exchange. In March 2019, the process was concluded as an agreement was signed with the global investment company Temasek. The family has decided that a major part of the proceeds from this transaction will be used to accelerate growth initiatives – both organically and through acquisitions.

The Board is convinced that long-term majority shareholders combined with active minority shareholders is a strong ownership structure.

Sustainable future Topsoe is rooted in decades of fundamental and applied research & development. This has made the company one of the world’s leading providers of catalyst and technology in its core business areas. Topsoe’s comprehensive knowledge of heterogeneous catalysts and complex

Consolidation and strong results

Letter from the Chairman

catalytic processes means that the company can continuously introduce cutting-edge solutions.

Additional capital from an investor will support the company in exploiting its strong R&D platform to achieve accelerated growth in existing as well as new business areas.

Most of the processes and products that Topsoe works with today are based on fossil fuels, and fossil fuels will remain very important for a long time. As long as oil and gas constitute the foundation of the global economy, Topsoe will continue to help customers use fossil resources in the most responsible, environmentally friendly, and efficient manner possible.

In order to make alternative energy resources – such as biomass, wind and solar – an economical and sustainable alternative to fossil fuels, new chemical technologies must be developed. Topsoe’s ambition is to leverage its unique competencies to position the company as a leading technology driver in selected strategic areas and gradually transform Topsoe’s offerings for a fossil-free future.

Topsoe is already well progressed in the development of several promising sustainable chemical technologies. Topsoe continuously seeks to get the maximum benefit from the company’s unmatched technical capabilities and a first-mover advantage in the market for sustainable solutions.

Highlights of the year Every year, the Board visits one of Topsoe’s regional offices. In 2018, we visited the Bahrain office and met customers from the region who expressed their deep appreciation of the

long lasting cooperation with Topsoe. We were happy to reaffirm our deep-rooted belief that the customers’ needs must always be on the top of the agenda for everybody in Topsoe in order for us to succeed. On the same occasion, it was a great pleasure to meet some of Topsoe’s dedicated and passionate employees in the global organization.

Innovation is one of Topsoe’s core values and forms the backbone of the company’s business. In December, the Board’s Innovation Committee awarded the Topsoe Legacy Prize for the first time. The prize celebrates outstanding innovations that have left an unmistakable mark on Topsoe’s business, and it reminds us all why innovation is vital for the sustainable development of not only the company but of the world. This time, the award was given to the teams behind BRIM® refining catalysts and the SynCOR™ technology for world-scale production of syngas, methanol, and ammonia.

A positive outlook2018 has been a year of significant growth and many positive developments. However, the year was also characterized by geopolitical and macroeconomic uncertainty, which seems to continue into 2019. Naturally, this is a concern for a global company like Topsoe, but the Board remains positive in our view on the long-term business opportunities.

On behalf of the Board of Directors, I would like to thank the Executive Committee and all of Topsoe’s employees for their excellent work and contribution in the past year.

Jeppe ChristiansenChairman of the Board of Directors

4LEttER FRoM tHE cHAIRMAn ANNUAL REPORT 2018 HALDOR TOPSOE A/S

contentstopsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

ManagementReview

Management ReviewLetter from the Chairman

“Capital from an investor will support the company in exploiting its strong R&D platform to achieve

accelerated growth.”

5LEttER FRoM tHE cHAIRMAn ANNUAL REPORT 2018 HALDOR TOPSOE A/S



ourLeadership

FinancialStatements

AuditorsReport

ManagementReview

leadership in both the refinery and chemical business areas.

Global politicsdespite political unrest and trade sanctions, which in many cases have made our customers postpone large technology investments, we see signs of growth in our technology business in the coming years.

In november 2018, we took the business decision to close down our commercial activities in Iran, which - together with the need to secure efficiency gains related to the divestment of our automotive and stationary denox business areas in 2017 - unfortunately made it necessary to lay off about 140 good colleagues.

Sustainable solutions In 2018, topsoe developed and commercialized several solutions that show great promise as sustainable alternatives to traditional solutions based on fossil fuels.

We are proud to develop solutions that tackle some of the world’s most

2018 was a very good year for topsoe. EBIt from the continuing business increased by 19%. catalyst revenue increased by 13%, and technology revenue by 9%.

Significant project deliveries to the Middle East had a positive impact on the results. Results were also positively influenced by our efforts to introduce innovative products and focus on customer needs, which have strengthened our global market leadership in several premium business segments.

the increased revenue and net profit were already reflected in a significant improvement of cash flows from operating activities.

during 2018, the order book has increased. We have been awarded a large number of new licenses in the chemical Business unit, and we have seen strong order book growth in the Refinery Business unit.

the 2018 results are very satisfactory, as they reflect a healthy core business based on our market

Excellent results, strong market position

pressing challenges: reducing co2 emissions, improving air quality, and the production of clean fuels and renewable chemicals.

our sustainable solutions are in all stages of the development pipeline. two examples of promising new solutions that are being commercialized now are the MoSAIK™ process to produce chemicals from biomass, and GEcco™, a solution for upgrading landfill gas to pipeline-quality gas.

Strategic focus pointsthrough a significant companywide focus on safety in 2018, we reduced the number of lost time accidents (LtAs) by more than 50% to a level considered best-in-class. Fortunately, the severity of the accidents occurred have generally been low, as almost all accidents have only led to very few days of absence.

We continued our development within digitalization and established a platform for training and execution of machine learning models. Initial proof-of-concept studies are very

Continuing operations Change DKK million 2018 2017 2017-2018

Revenue 5,617 5,011 12%

EBItdA 964 852 13%

EBIt 708 595 19%

Profit from continuing operations 507 403 25%

Loss from discontinuing operations -16 -422

net profit 491 -19

Lost time accident frequency (per one million work hours) 3.1 6.3

R&d spend (of revenue) 9.0% 9.4%

Letter from the CEO

6LEttER FRoM tHE cEo ANNUAL REPORT 2018 HALDOR TOPSOE A/S



ourLeadership

FinancialStatements

AuditorsReport

Letter from the CEOManagementReview

“The 2018 results are very satisfactory, as they reflect a

healthy core business.”

encouraging and suggest that such advanced analytics tools can substantially improve our service offerings to customers.

We also maintained our high level of investment in research and development of 9% of revenue, and we have invested in production efficiency and boosted capacity for some of our core products.

during the year we introduced several innovative products. one example is SyncoR Methanol™ which is a new and competitive solution for very large methanol plants. Another important new product is the tK-6001 HySwell™ catalyst, which offers refiners top-class activity in hydrocracking and the production of ultra-low sulfur diesel.

Organizational developmentsIn mid-2018, we reorganized our sales efforts in order to give customers one single point of contact. Also, sales staff were empowered to improve customer experience and bottom line growth.

In August, we took full ownership of topsoe Project development, previously a joint venture with a German partner under the name Ferrostaal topsoe Projects. topsoe Project development offers customers highly specialized services within financing and project development. this is an important factor in bringing topsoe technologies into play in the earliest phases of our customers’ projects.

topsoe Project development is located in a new topsoe office in Essen, Germany. We also opened an office in Jakarta, Indonesia, to be closer to our customers in this important market.

In February, Amy Hebert joined topsoe as deputy cEo and Executive Vice President, chemicals. Ms. Hebert has broad experience from top executive positions with global catalyst companies serving the petrochemical and refining industries.

Growth aheadIn March 2019, we concluded the process of identifying a minority investor, preparing the way for an initial public offering (IPo). I look very much forward to the collaboration with our new financial partner, temasek, and beginning the next phase of this vital project which will give access to the capital market, thus enabling us to invest in acquisitions as well as organic growth.

I want to thank our customers and partners for excellent collaboration in the past year. I would also like to thank the Board of directors for fruitful collaboration. Finally, I would like to thank topsoe’s employees, who have made an exceptional effort in 2018.

Bjerne S. Clausen President & chief Executive officer

7LEttER FRoM tHE cEo ANNUAL REPORT 2018 HALDOR TOPSOE A/S



ourLeadership

FinancialStatements

AuditorsReport

ManagementReview

Energy efficiencyAll topsoe solutions are designed for optimal energy efficiency to

save fuel and reduce co2 emissions. topsoe also provides technologies for producing renewable fuels that can replace traditional feedstocks.

Enhancing food production

topsoe’s catalysts and techno-logies are used globally in the

production of ammonia for fertilizers. Fertilizers increase productivity in agriculture and

are absolutely necessary to feed the current world population.

Environmental protection

topsoe offers a variety of solutions for producing clean

fuels and removing sulfur, nitrogen oxides, and hazardous

particles from industrial emissions. clean air is essential

for good health and the environment, not least in the

large cities of the world.

Topsoe solutions address global megatrendsour catalytic solutions help tackle some of the most pressing challenges of our time within food supplies, energy, and pollution control.

8toPSoE In BRIEF ANNUAL REPORT 2018 HALDOR TOPSOE A/S

Topsoe in BriefManagementReviewcontents


ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

Topsoe in BriefTopsoe solutions

TK-930 D-wax™ catalystRenewable diesel helps reduce consumption of crude oil and benefits the climate by reducing co2 emissions. catalysts are essential in the production of renewable diesel, and topsoe is a world leader in this field. In 2018, we introduced the tK-930 d-wax™ dewaxing catalyst. Without this type of catalyst, most renewable diesel would be solid at 20°c and useless as motor fuel. tK-930 d-wax™ solves the problem in a more efficient way than standard catalysts. It can also be used for traditional diesel and jet fuel.

Why is catalysis important?• A catalytic process converts one chemical component

into another. For instance, hydrogen and nitrogen can be catalyzed into ammonia for fertilizer.

• using a catalyst to produce a chemical process speeds up the reaction and allows it to take place under less severe conditions, which consumes much less energy. Production yield increases, and resources are saved.

• catalytic processes are indispensable in industry today – and will also be vital for the production of sustainable energy and products in the future.

• Without catalysis, we would not have enough gasoline, plastic, polyester, artificial fertilizer, and countless other products to cover our needs.




ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

Haldor topsoe is a world leader in high-performance catalysts and proprietary technologies for the chemical and refining industries. Since the company was founded in 1940, it has been active in research, development, manufacturing, marketing, sale and service of catalysts, technology, and catalytic processes.

topsoe is a market leader in several high value-add segments, including hydroprocessing, hydrocracking, sul-fur and nox emissions management, and hydrogen (Refinery Business unit), and ammonia, methanol, sul-furic acid, syngas, and gas-to-liquids (chemical Business unit).

decades of focused fundamental and applied R&d activities have provided topsoe with the most com-

prehensive knowledge worldwide of heterogeneous catalysts and cata-lytic processes for the chemical and refining markets. 9-10% of revenue is consistently reinvested in R&d. As a science-based company, we are able to continuously introduce cut-ting-edge technological solutions.

In recent years, topsoe’s Sustainable Business unit has commercialized technologies such as tIGAS™ (gaso-

line from natural gas), catalytic filters, cold desulfurization, oxo-alco-hols, viscose off-gas treatment, and propane and butane hydrogenation. the unit has a very strong pipeline of new business opportunities within landfill-to-gas, landfill-to-power, bat-tery materials, bio-based chemicals and more.

Company snapshot




ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

Company snapshot

Haldor topsoe will continue to help its customers use fossil resources in the most responsible, environmentally friendly, and efficient manner possible.

In parallel, we intend to be a driving force in enabling a sustainable chemical and energy industry to secure the future of our planet. new chemical technologies must be developed to make alternative energy resources – such as biomass, wind, and solar – an economical and sustainable alternative to fossil fuels.

topsoe’s leading and comprehensive catalytic and technical competen-cies put the company in a unique position to shape this future market and make a positive difference in the world.

The Topsoe ambition




ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

The Topsoe ambition

Making optimal performance possible our customers are under constant pressure to get more from less and even the smallest performance improvements are important. In topsoe, we respond to customer challenges, using our exceptional insight into catalysis and technology to deliver unique, integrated solutions that secure optimal performance for our customers across the value chain.




ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

Making optimal performance possible

topsoe has a solutions-focused business model covering the full value chain, based on unique chemical engineering competences.

Business model

R&D AND APPLICATION

EXPERTISE

GLOBALMARKET

EXPERIENSE

SERVICE:ENTIRE

PROCESS CHAIN

BROAD PRODUCT

PORTFOLIO

PROJECT DEVELOPMENT &

INVESTMENT

PROCESS DESIGN &

ENGINEERINGLICENSING CONSTRUCTION HARDWARE CATALYSTS

BUSINESS TECH. &

SERVICES

OPTIMAL PERFORMANCE

OPTIMAL SOLUTIONS

R&D AND APPLICATION

EXPERTISE

GLOBALMARKET

EXPERTISE

SERVICE:ENTIRE

PROCESS CHAIN

TOPSOE OFFERINGS TOPSOE DOES NOT OFFER CONSTRUCTION SERVICES, BUT COOPERATES WITH WORLD-CLASS ENGINEERING, PROCUREMENT & CONSTRUCTION COMPANIES (EPC).

BuSInESS ModEL ANNUAL REPORT 2018 HALDOR TOPSOE A/S 13



ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

Business model

Highlights

July

Sinopec chose Topsoe CATOX catalyst for Asia’s largest styrene-butadiene rubber emissions control projectSinopec Qilu Petrochemical Corporation chose Topsoe’s CATOX catalyst for cost-efficient control of volatile organic compounds (VOC) in emissions from their rubber plant in Zibo, China.

https://blog.topsoe.com/sinopec-chooses-topsoe-catox-catalyst-for-asias-largest-styrene-butadiene-rubber-emissions-control-project

February

Successful start-up of the world’s largest wet gas sulfuric acid (WSA) plantThe WSA plant treats 131,000 tons of acid gas per year from a neighboring world-scale refinery in Huizhou, China. The patented WSA process converts more than 99.9% of the sulfur in the off-gases into commercial grade sulfuric acid.

https://blog.topsoe.com/successful-start-up-of-worlds-largest-wet-gas-sulfuric-acid-wsa-plant

February

Haldor Topsoe and JITRI founded joint R&D company to accelerate development of innovative technologies for the Chinese marketThe joint company focuses on applied research and fast commercialization of new technologies, e.g. more cost-effective NCA batteries for electric cars. The company will also function as a test facility for Topsoe’s Chinese customers within hydroprocessing and emissions management.

https://blog.topsoe.com/haldor-topsoe-and-jitri-found-joint-rd-company-to-accelerate-development-of-innovative-technologies-for-chinese-market

January

Topsoe chosen as technology licensor for the world’s largest methanol facilityIGP Methanol LLC awarded Haldor Topsoe a contract for engineering of a methanol plant that will produce 1.8 million tons per year. The plant is part of a planned complex with a total production capacity of 7.2 million tons per year in Plaquemines Parish, Louisiana, in the U.S. Topsoe’s SynCOR Methanol™ technology will be a core element of the project.

https://blog.topsoe.com/topsoe-chosen-as-technology-licensor-of-the-worlds-largest-methanol-facility

14HIGHLIGHtS ANNUAL REPORT 2018 HALDOR TOPSOE A/S



ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

Highlights











September

UCC Shchekinoazot launched methanol and ammonia co-production plant licensed by Haldor TopsoeUnited Chemical Company Shchekinoazot inaugurated a methanol and ammonia co-production plant in the Tula region of Russia. The new plant can produce 450,000 tons of methanol and 135,000 tons of ammonia per year and is based on Topsoe’s IMAP™ technology.

https://blog.topsoe.com/ucc-shchekinoazot-launches-methanol-and-ammonia-co-production-plant-licensed-by-haldor-topsoe

August

New orders cemented Topsoe’s leading position in ammonia in IndiaTechnipFMC awarded Topsoe a contract for license and engineering of two 2,200 tons-per-day ammonia plants. The plants are part of the Indian government’s revival plans for the domestic fertilizer sector. Three out of the four current fertilizer plant revival projects are based on Topsoe’s ammonia technology.

https://blog.topsoe.com/new-orders-cement-topsoes-leading-position-in-ammonia-in-india

September

New catalyst helps sulfuric acid producers comply with emission standards without compromising on performanceA much higher catalytic activity of the new LEAP5™ catalyst offers sulfuric acid plant operators a significantly more effective way to achieve compliance with emissions standards without compromising on performance.

https://blog.topsoe.com/comply-with-emission-standards-without-compromising-on-performance

december

NOVATEK Group selected Topsoe hydrogen technology for their first refineryLLC NOVATEK – Ust-Luga chose the Haldor Topsoe Convection Reformer (HTCR) for hydrogen production at their refinery in Ust-Luga, Russia, because of its minimal water consumption and small footprint. It also played a role that the modularized unit could be delivered fast.

https://blog.topsoe.com/novatek-group-selects-topsoe-hydrogen-technology-for-their-first-refinery

15HIGHLIGHtS ANNUAL REPORT 2018 HALDOR TOPSOE A/S



ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief










Russia and nearby countries

Russia and neighboring countries need solutions to capitalize on their rich oil and gas resources in an efficient way. This has led to a strong position for Topsoe’s offerings, especially within gas monetization and in the refinery and fertilizer industries. Our catalyst and technology business has grown fast in recent years and represents a significant share of Topsoe’s overall revenue.

Our Moscow office is the base for 65 employees who service Russia, Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Ukraine, and Uzbekistan. Topsoe has enjoyed close collaboration with the Russian industrial and scientific community for decades.

Latin America

In 2018, customers in Colombia, Brazil, Chile, Peru and Argentina chose Topsoe’s hydrotreating, hydrocracking and VK catalysts, cementing our high market share in the region. Topsoe was awarded the license and basic engineering for two grassroots hydrotreating projects in Argentina, a contract for hardware supply in Peru, and a contract for catalysts for six naphtha post-treatment units in Brazil.

Topsoe’s engagement in Latin America continues to grow. Nine of the eleven hydrocrackers in Latin America use our catalysts, and customers continue to show great interest in our catalyst and technology solutions.

We employ 26 people at our offices in Buenos Aires, Rio de Janeiro and Mexico City.

Headquarters

Regional offices

Production plants

Engineering

Topsoe aroundthe globe

Europe

Denmark is home to Topsoe’s headquarters, where over 1,000 employees work in research & development, engineering, global sales, and support functions. The research conducted here has resulted in e.g. the LEAP5™ catalyst and the MOSAIK™ bio-based chemicals solution.

Topsoe’s largest production facility is located in Frederikssund, Denmark. Here, more than 570 highly skilled operators and other employees manufacture a large variety of catalysts to very high quality standards.

In 2019, Topsoe opened an office in Essen, Germany. The 12 specialists employed here support Topsoe’s customers in project development, structuring, and financing.

north America

Customers in the refining, chemical and petrochemical industries in North America show great interest in Topsoe’s catalysts and technologies, making this our largest market. The shale gas boom has spurred significant interest in solutions that convert shale gas into high-value products. Our portfolio of hydroprocessing technologies such as hydrocracking and renewable fuels technologies are also in high demand.

We employ 75 people at our main office in Houston, US, and at our offices in Los Angeles, US, and Edmonton, Canada. At our production plant in Bayport near Houston, 120 employees produce around 15,000 tons of high-performance catalysts annually in the four production units.

customers all over the world are serviced by our regional offices. topsoe’s global organization also encompasses production plants and engineering activities.

16toPSoE ARound tHE GLoBE ANNUAL REPORT 2018 HALDOR TOPSOE A/S



ourLeadership

FinancialStatements

AuditorsReport

Topsoe around the globeTopsoe In Brief

India

Indian ammonia plants use Topsoe catalysts to make the majority of all ammonia produced in the country. Their preference for Topsoe technology has also made us the largest supplier of hardware for the ammonia industry. In 2017-18, we have been selected as licensors for two fertilizer revival projects (Sindari and Barauni) and have invested in the Ramagundam ammonia plant – a flagship revival project.

We are also active in the Indian refinery market, especially within hydroprocessing, and Topsoe supports India's drive for cleaner fuels.

Our New Delhi regional office is the workplace for more than 200 people, including our engineering unit, IT competence center, and finance service center.

Southeast Asia

Southeast Asia has several emerging markets and is rich in natural resources that can be monetized using Topsoe technologies. More stringent environmental regulations will increase the demand for Topsoe’s solutions, and we experience increasing demand for technology and catalysts for refinery and environmental solutions. Within ammonia and methanol there is an interest in revamping existing units for energy optimization and diversification purposes.

In 2018, we opened an office in Jakarta, Indonesia. Topsoe’s office in Kuala Lumpur, Malaysia, supports our customers in the ASEAN countries as well as Bangladesh, Australia and New Zealand. 20 people are employed in the two offices.

china

The growth of independent refineries in China is very much driven by the country's increasing energy consumption and demand for oil products and downstream chemicals. This brings business opportunities for Topsoe’s refinery catalysts and technologies, e.g. for hydrotreating and hydrocracking. Topsoe's sulfur management technologies still maintain a high market share due to higher emission standards. The stricter environmental legislation and the adjustment of the energy structure opens the market for Topsoe’s chemical and sustainable technologies such as methanol catalyst, tar hydrotreating, and emission control filters.

Topsoe has 70 employees in China at our regional office in Beijing.

Middle East

Customers in the petrochemical and refining industries of the region focus on downstream integration. This requires Topsoe catalysts, technologies, and services that support core processes within methanol, ammonia, hydroprocessing, and hydrogen production. As fuel specifications and environmental regulations become more stringent, our hydroprocessing and environmental solutions see increasing demand. Topsoe also offers technology upgrades to improve energy efficiency and production yield.

In 2018, we opened an office in Khobar, Saudi Arabia, to strengthen our presence in this market.

13 people are employed at our offices in the Middle East, the majority at our office in Manama, Bahrain.

Los Angeles

Edmonton

Houston

Buenos Aires

Rio de Janeiro

Copenhagen Moscow

ManamaNew Delhi

Kuala Lumpur

Beijing

Frederikssund

KhobarMexico City

Dalian

Jakarta

Essen

17toPSoE ARound tHE GLoBE ANNUAL REPORT 2018 HALDOR TOPSOE A/S



ourLeadership

FinancialStatements

AuditorsReport

Topsoe In Brief

Accomplishments and results

18AccoMPLISHMEntS And RESuLtS ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport

Accomplishments & ResultsAccomplishments & Results



topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport


Income statement 1)

DKK million 2018 2017 2016 2015 2014

Revenue 5,617 5,011 5,150 5,785 5,685

Gross profit 2,620 2,391 2,608 2,483 2,542

EBITDA 964 852 1,071 795 929

Depreciation and amortization -256 -257 -260 -293 -366

EBIT 708 595 811 502 563

Net financial expenses etc. -16 -66 -24 -40 14

Profit from continuing operations 507 403 545 322 440

Loss from discontinuing operations -16 -422 -53 - -

Net profit 491 -19 492 322 440

Balance sheet

DKK million 2018 2017 2016 2015 2014

Balance sheet total 5,664 6,189 7,161 7,194 6,455

Equity 1,286 1,664 2,238 2,003 1,831

Net working capital 447 668 610 451 540

Net interest bearing debt 756 855 1,191 1,152 1,016

Cash flow

DKK million 2018 2017 2016 2015 2014

Cash flows from operating activities 1,189 137 748 750 754

- Of which continuing operations 1,205 421 785 - -

Cash flows from investing activities -220 690 -386 -638 -585

- Of which investments in property, plant and equipment -251 -211 -393 -589 -600

Cash flows from financing activities -1,194 -586 -530 -99 -222

Change in cash and cash equivalents for the year -230 201 -162 32 -14

Employees

Number 2018 2017 2016 2015 2014

Average number of employees 2,246 2,527 2,543 2,688 2,694

Ratios

% 2018 2017 2016 2015 2014

Gross margin 2) 46.6 47.7 50.6 42.9 44.7

EBITDA margin 2) 17.2 17.0 20.8 13.7 16.3

EBIT margin 2) 12.6 11.9 15.7 8.7 9.9

Return on invested capital (ROIC) 2) 26.2 22.4 33.8 16.0 20.1

Equity ratio 22.7 26.9 31.3 27.8 28.4

Return on equity 33.3 -1.0 23.2 16.8 25.3

The ratios have been prepared in accordance with the Recommendations & Financial Ratios produced by the Danish Finance Society and CFA Society Denmark.1) Income statements for 2016, 2017 and 2018 consist of continuing operations with discontinuing operations in a separate line2) Ratios for 2016, 2017 and 2018 apply to the continuing operations.3) Figures for 2014-2015 have not been restated with the sale of the emissions control business in 2017. Figures for 2014-2015 are

therefore not comparable to figures for 2016-2018, where the divested business is presented as discontinuing operations.

Five-year summaryBelow is a summary of the Group's financial highlights for the five most recent years.

3)

3)

3)

3)

3)

3)

3)

3)

3)

3)



topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport

Five-year summaryAccomplishments & Results

Profit from continuing operations amounted to dKK 507 million in 2018 (2017: dKK 403 million). the increase in profit was mainly due to a significant growth in catalyst revenue in 2018 and a generally improved EBIt margin. catalyst revenue for the chemical Business unit and the Refinery Business unit increased by 21% and 15%, respectively. technology revenue was positively affected by the successful close-down of many projects in Iran before the reinstatement of uS sanctions on november 4, 2018, including a significant one-time effect of restarted Iranian contracts that impacted revenue and EBIt by dKK 91 million.

2018 was impacted by the finalization of the divestment of the emissions control business areas concluded on november 30, 2017. the losses relating to the discontinuing activities within the emissions control business areas amounted to dKK 16 million - mainly

related to adjustment of net assets sold (2017: dKK 422 million).

net profit (after loss on discontinuing operations) increased significantly and showed a profit of dKK 491 million for 2018 (2017: dKK -19 million).

EBIt from continuing operations increased in 2018 by 19% to dKK 708 million corresponding to an EBIt margin of 12.6% (2017: 11.9%).

the increased revenue and net profit were already reflected in a significant improvement of cash flows from operating activities.

R&d expenses were maintained at a high level with a R&d-to-revenue-ratio of 9.0% (2017: 9.4%).

1) 2016, 2017, and 2018 figures reflect continuing operations only. 2014 and 2015 figures include discontinued business.

1) 1)

1) 1)

EBITDA (left)EBITDA margin (right)

EBIT (left)EBIT margin (right)

DKK million

6,000

8,000

4,000

2,000

0 2014 2015 2016 2017 2018

RevenueDKK million

0 2014 2015 2016 2017 2018

Cash flow from operating activities

1,050

1,400

700

350

DKK million %

21

19

17

15

132014 2015 2016 2017 2018

EBITDA

800

1,200

600

300

0

DKK million %

2014 2015 2016 2017 2018

EBIT

16

14

12

10

8

700

900

500

300

0



topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport


Financial report

Income statement

RevenueRevenue from continuing operations increased by 12% to DKK 5,617 million (2017: DKK 5,011 million). Exchange rate developments from 2017 to 2018 had a negative impact of 1.2% on revenue. Catalyst revenue increased by 13%, and technology revenue increased by 9%.

Earnings before interest, tax, depreciation, and amortization (EBITDA)Average gross margins remained relatively stable in 2018 at 46.6% compared to 47.7% in 2017.

EBITDA from continuing operations increased by 13% to DKK 964 million, corresponding to an EBITDA margin of 17.2% (2017: 17.0%).

Staff expenses amounted to DKK 1,656 million, which is an increase of 8% compared to 2017 (mainly due to redundancy costs in connection with layoffs in August 2018 and increased bonus accrual). Raw material costs, including change in inventories, increased by 18% to DKK 1,536 million, driven by increased catalyst sales volumes. Purchased equipment for contract work increased by 5% to DKK 606 million due to increased activity in our technology business. Other external expenses increased by 27% to DKK 958 million. Adjusted for cost of servicing discontinued businesses and associated other revenue, the increase was 16%. The increase was mainly due to increased losses on disposals of fixed assets (e.g. expired patents), external assistance, agent commission, rental and leasing, and repair and maintenance.

Earnings before interest and tax (EBIT)EBIT from continuing operations increased by 19% to DKK 708 million corresponding to an EBIT margin of

12.6% (2017: 11.9%). Depreciation amounted to DKK 256 million, which is on par with 2017.

Net profitNet profit increased to DKK 491 million (2017: DKK -19 million).

The increase in the net profit is mainly explained by:

• An increase in EBIT to DKK 708 million in 2018 (2017: DKK 595 million).

• A reduced loss on sale of discontinuing operations of DKK -16 million in 2018 (2017: DKK -422 million).

• Reduced interest expenses and positive exchange adjustments, in total DKK -22 million (2017: DKK -60 million).

• Partly offset by an increase in tax to DKK 185 million (2017: DKK 126 million).

cash flow and balance sheet

Cash flows from operating activitiesCash flows from continuing operations amounted to DKK 1,205 million (2017: DKK 421 million). Net working capital decreased by DKK 410 million and made up 8.0% of revenue (2017: 13.3%), excluding warranty provisions. The improvement has been driven by collection of accounts receivables, as well as improved inventory turnover in 2018.

CAPEXCAPEX increased by 30% and amounted to DKK 371 million (2017: DKK 284 million). This includes, e.g., equity investments in Ramagundam Fertilizers and Chemicals Ltd., India, as well as GTLA Holding LP, US. Investments in intangible assets,

property, plant, and equipment amounted to DKK 258 million in 2018, a decrease of 9% compared to 2017.

Net indebtednessNet indebtedness decreased by 12% and amounted to DKK 756 million (2017: DKK 855 million).

At the end of 2018, the interest-bearing debt was DKK 1,517 million (2017: DKK 1,846 million). A DKK 500 million tranche of corporate bonds expired in April 2018. This was refinanced by a new loan in European Investment Bank. The last remaining tranche of corporate bonds (DKK 500 million) will expire in April 2020.

At the end of 2018, no surplus funds were placed with the holding company, Haldor Topsøe Holding A/S (2017: DKK 129 million as part of a cash pool arrangement).

Return on invested capital (ROIC)ROIC amounted to 26% (2017: 22%) driven by the increase in EBIT as well as asset reduction.

order backlog

The order backlog amounted to DKK 3,796 million at the end of 2018 (an increase of DKK 311 million compared to the end of 2017). This was mainly due to a high inflow of catalyst orders. For the continuing business backlog, excluding Iran, the order backlog increased by DKK 1,079 million during 2018 (from DKK 2,717 million to DKK 3,796 million). At the end of 2018, the catalyst order book was at a satisfactory level compared to previous years.

22FInAncIAL REPoRt ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport

Financial reportAccomplishments & Results

Outlook for 2019

Revenue

We expect that Group revenue will be in the range of DKK 5,400-5,700 million in 2019. The revenue development will depend on the level of new catalyst and technology orders obtained during 2019 and the progress of existing technology orders. In some markets, project development is impacted by the project owners’ ability to finance projects. Exchange rate developments, most notably the DKK/USD exchange rate, will impact revenue. Revenue development is negatively impacted by the close-down of all Iranian commercial activities on November 4, 2018.

EBIt

EBIT margin is expected to be in the range of 11-13% in 2019.

In 2019, we expect to maintain a high level of R&D and business development activities at approx. 9% of revenue.

cash flow and funding

Operating cash flow (excluding working capital development) is expected to be at the same level in 2019 compared to 2018. Excluding warranty provisions, working capital is expected to be below 10% of revenue on average.

Topsoe’s current funding position is strong, based on access to the corporate bond market, institutional banks, as well as commercial banks. Committed revolving credit facilities are in place.

Topsoe intends to maintain a credit profile that will ensure compliance with all bank covenants at any time. When market terms are attractive and there is a need, Topsoe will consider issuing additional corporate bonds as well as obtaining other credit facilities.

Forward-looking statements

Haldor Topsoe A/S’ financial reports, whether in the form of annual reports or interim reports, as well as any presentations based on such financial reports, and any other written infor-mation released, or oral statements made, to the public based on this annual report or in the future on behalf of Haldor Topsoe A/S, may contain forward-looking statements.

These forward-looking statements are based on current plans, estimates and projections. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which may be outside Haldor Topsoe A/S’ influence, and which could materially affect such forward-looking statements

Haldor Topsoe A/S cautions that a number of factors, including those described in the risk management part of this report, could cause actual results to differ materially from those contemplated in any forward-looking statements.

23outLooK FoR 2019 ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport

Outlook for 2017Accomplishments & Results

Risk management

Enterprise risk management

Topsoe operates an enterprise risk management program with quarterly review and reporting, followed up by mitigating activities. The program enables Topsoe to identify risks early, assess them, and implement mitigating actions where feasible.

The Topsoe code of conduct has been implemented throughout the organization, including policies and business processes relating to anti-corruption, anti-money laundering, competition law, and other compliance issues. Our code of conduct is an example of a global mitigating action that is intended to prevent a number of potential risks related to business ethics and legal issues. Topsoe has a global compliance hotline (whistleblower solution) to support that concerns or suspicions are reported, also anonymously if so desired. The compliance hotline is available at www.topsoe.com/Compliance-Hotline.

The general risk factors and the associated mitigating actions are outlined below.

Strategic and operational risks

Customer demandCatalysts are involved in the vast majority of industrial chemical processes today. In general, we see no indication of disruption in our core markets that will reduce demand or create substitute products, but we obviously cannot rule out such disruption in the future. On most products we compete on quality, wherefore significant resources are allocated to R&D to be able to continue producing high-performing

products as requested by our customers. A very significant part of our technical and catalytic solutions is based on fossil fuels, notably natural gas. If cost-competitive alternative energy sources emerged, it could have a significant impact on our current business, and the level of market growth is, for some markets, impacted by the shift towards alternative energy sources. Therefore, we seek to develop new sustainable solutions in the Sustainable Business Unit to cater for future demand. For new products, processes, and services that are being developed, our sales depend on market demand.

Intellectual property (IP) protection As a highly innovative company, Topsoe pursues IP protection through, for instance, patents, trade secrets, trademarks, design, and copyright law. However, our IP could be challenged, invalidated, circumvented, or rendered unenforceable. We will defend and prosecute our IP rights in court if deemed necessary.

Information securityAs a knowledge-based company, Topsoe is exposed to the risk of theft of confidential information. To mitigate the risk of confidential information being disclosed through theft or fraud, an information security roadmap has been established and external advice is taken, focusing on identifying and adequately mitigating potential risk areas. As the risk profile is developing continously, and new risk areas can evolve, Topsoe continuously measures the efforts within this area and seeks to mitigate new potential threats.

Raw materials Raw materials are a significant cost component in our products, and prices can fluctuate considerably. We seek to mitigate this risk through escalation clauses in customer contracts and hedging clauses in vendor contracts. The vendor clauses are typically

linked to market indices. In addition, we use financial hedging to a certain extent. We also seek to have multiple suppliers for each raw material. We are exposed to some single-source supply risk, which could make us vulnerable to cost increases, and which can potentially influence the downstream supply chain. The single-source suppliers are continuously assessed, and we work actively to mitigate and limit our single-source exposure.

Operations Topsoe’s production of catalysts takes place in Frederikssund (Denmark) and Houston (United States). If production is closed down for an extended period in one of our plants – e.g. due to damage to the production facilities (caused by fire, flooding, wind storm, etc.), equipment failure, or cyber attacks – or if commissioning of a new production line is substantially delayed, it could have a material impact on Topsoe’s earnings. We seek to mitigate this risk by operating multiple production lines for key products and enforcing a safety stock policy. We have also taken out business interruption insurance and property insurance.

Topsoe uses and produces chemicals. In our portfolio, we have hazardous chemicals that could potentially pose a risk if not handled with care. It is of high priority that all our chemical operations are fully compliant with all chemical and environmental regulations in all jurisdictions where we operate or sell our products. We have processes in place for continuous monitoring of global chemical regulations in order to identify any relevant regulatory changes that might affect our products or operations.

Topsoe is exposed to project execution risk on technology projects. Systematic project management seeks

24RISK MAnAGEMEnt ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport

Risk managementAccomplishments & Results

to limit the risk of delayed deliveries, re-engineering, and cost overrun.

Issuance of bonds in support of contractual liabilities is an inherent and necessary part of Topsoe’s business model, for instance in the form of bid bonds, advance payment bonds, and performance bonds issued by banks on behalf of Topsoe. Risk mitigation includes thorough structuring of con-tracts and related bonds.

Insurance Besides property insurance and business interruption insurance, a number of other operational risks are insured, including general liability, product liability, professional indemnity and transportation.

Geopolitical risksTopsoe’s global presence exposes earnings to geopolitical events.

Political actions, such as embargoes, sanctions, trade barriers, new taxes, currency restrictions, and changes in environmental legislation, etc., may impact results and cash flows. To a certain degree, this risk is mitigated by monitoring regulatory initiatives, geographical diversification, and by ensuring – to the extent possible – that risk and cash flows are maintained positive for our individual contracts. New political sanctions or cancellation of existing political sanctions could potentially have a significant impact on our business. Our regulatory monitoring and business integrated compliance measures ensure that Topsoe is compliant with applicable international sanctions at all times.

Financial risks

CurrenciesAs Topsoe operates globally, the income statement, balance sheet, and cash flows are subject to the risk of currency fluctuations, mainly in relation to Topsoe’s flows of USD.

Part of this risk is mitigated through natural hedges arising from activities where Topsoe has both income and expenses in the same currency. However, if the risk is not covered by natural hedges, Topsoe hedges certain future cash flows in accordance with a hedging policy. A 5% change in the USD/DKK exchange rate is assessed to have an EBIT effect of DKK 5-10 million.

Interest rates Long-term debt consists of loans and bonds with floating as well as fixed interest rates. Topsoe’s policy is to maintain a loan portfolio with 35-50% floating rate and 50-65% fixed



topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport


rate. For the floating rate portion of Topsoe’s interest-bearing debt, an increase in the interest rate level of 1 percentage point will increase interest expenses by DKK 4 million.

Credit Topsoe’s credit risk is primarily related to trade receivables from state-owned as well as privately owned corporations. Where feasible, we seek to mitigate credit risk by applying instruments such as letters of credit and bank guarantees as well as selective structuring of payment terms, etc. Loss allowances are assessed on an ongoing basis.

Counterparties In this context, counterparty risk is defined as credit risk on financial institutions when dealing with them, either by placing deposits, entering into derivative financial instrument transactions, or otherwise. In order to reduce counterparty risk, Topsoe only deals with financial counterparties who, in the opinion of Management, have satisfactory financial strength (based on credit rating from a

recognized international credit rating agency, where feasible).

Liquidity Topsoe must maintain sufficient liquidity to fund daily operations, debt service, and expansion. Topsoe’s access to liquidity consists of cash and cash equivalents, including access to committed revolving credit facilities. The target is to maintain a minimum of DKK 500 million in unused committed revolving credit facilities at any time.

Restrictive covenants Some of the financing arrangements of Topsoe are subject to financial covenants, and if violated, this could limit the ability to finance the company’s operations and capital needs. Covenants include equity ratio (min. 20%), interest coverage (min. 5), and leverage (net debt/EBITDA) requirements (max. 3.5).

Dividend policy Haldor Topsoe Group finances the operations of Haldor Topsøe Holding A/S through dividend payments. The liquidity effect of the expected future dividend payments has been

incorporated in the cash flow forecasts of Haldor Topsoe Group. The dividend potential must take into account covenant requirements.

TaxTopsoe’s business structure with entities and/or business activities in many countries implies that a number of different direct, indirect, and collected taxes apply on a global basis. The combination of complexity in our business and our business structure requires dedicated focus on tax management; a focus that always respects international tax principles and local tax law, while managing the tax cost and tax risk of Topsoe. Topsoe will, at all times, use its best endeavors to comply with the tax legislation in the countries in which it operates, in accordance with OECD standards. When needed, Topsoe seeks to clarify uncertainties by involving external advisors and by taking a justifiable position in accordance with international tax principles and in alignment with Topsoe’s code of conduct. Topsoe's tax management is documented in a global tax policy.



topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport


Sustainable business

Topsoe continuously strives to create sustainable solutions that make a difference in the world of today – and tomorrow. We are committed to ensure that our solutions, as well as our conduct, are economically, environmentally, and socially sustainable.

Acting responsibly in all aspects of our business is a fundamental element of

our values. It serves as the foundation for how we do business in a complex, international business environment with cultural, political, and legal challenges.

Topsoe has instituted a corporate responsibility framework that allows Management to drive progress on corporate social responsibility and sustainability across Topsoe’s global

organization. The framework provides transparency of environmental, social, and governance efforts within our business.

Read more about our progress on sustainability and cSR in our sustainability report at www.topsoe.com. With this report topsoe ensures compliance with sections 99a and 99b of the danish Financial Statements Act.

SUPPLY CHAIN WORKING ENVIRONMENT PRODUCTION SOLUTIONS

& PRODUCTS

Corporate responsibility

LOCAL COMMUNITY

COMMITMENT

GLOBAL DONATIONS

9

15

12

6

3

0 20142012 2013 2015 2016 2017 2018

Lost time accident frequency rateNumber of days

450

750

600

300

150

0 20142012 2013 2015 2016 2017 2018

Lost workdays caused by accidents

LTA Frequency is the number of lost time accidents per one million working hours over a twelve-month period.

27SuStAInABLE BuSInESS ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief

ourLeadership

FinancialStatements

AuditorsReport

Our businessCorporate social responsibility and sustainAccomplishments & Results

Sustainable business

28ouR LEAdERSHIP ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

OurLeadership

Our leadership

29ouR LEAdERSHIP ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

Our leadershipOurLeadership

Corporate Governance

Topsoe has a corporate governance structure in place that specifies how our business is led and controlled. In 2018, the Board of Directors and its committees have further optimized their processes and collaboration and ensured that key governance principles are continually developed and implemented, keeping Topsoe on par with enterprises we consider our peers.

In February 2018, Topsoe announced and welcomed new Deputy CEO and EVP, Amy Hebert.

In early March, a non-Board committee was established to increase Topsoe’s focus on compliance and sustainability.

The ordinary election of employee representatives for the Board of Directors took place in connection with the annual general meeting, and at the time of writing, three out of the four employee representatives in the Board of Directors are new, compared to one year ago. During the year, Board member Mr. Henrik Stiesdal left the Board, as he wanted to focus on other engagements.

Shareholders

Currently, Topsoe is fully owned by the Topsøe family through the company Haldor Topsøe Holding A/S, of which they own 100%. On March 12, 2019, Haldor Topsøe Holding A/S and Temasek signed an agreement for Temasek to purchase 30% of the shares in Haldor Topsoe A/S. Closing is expected to be carried out later in 2019. Haldor Topsøe Holding A/S

will remain the long-term majority shareholder.

The family’s strong commitment to Topsoe’s long-term growth strategy and continued development is fundamental to maintaining an innovative and sustainable company culture in line with the spirit of our founder.

Board of directors

The company has a two-tier management structure anchored in the Board of Directors and the Executive Committee. The Board is an advisor to and supervisor of the Executive Committee and has particular focus on formulating, revising, and reviewing the company strategy. The two-tier management structure ensures complete separation of roles and responsibilities, where no person serves as a member of both.

Gender representation in the Board The Topsoe Board of Directors has six members, not counting employee representatives. There are five male and one female Board member, giving a female representation of 17% on the Board. The Board has set a target of two female Board members by the end of 2020. This target has been carefully considered when members have been replaced or added to the Board. However, it has not been possible to identify and appoint new female members to the Board. The Board of Directors continues to focus on this target when evaluating its composition, competencies, and future candidates.

Board committees

Finance CommitteeIn 2010, Topsoe established the Finance Committee, which is responsible for assisting the Board in fulfilling its oversight responsibilities by reviewing and monitoring the company’s financials. The Finance Committee consists of three members elected by the Board among its members:

Jakob Topsøe (Chairman), Jeppe Christiansen, Anders Heine Jensen.

Remuneration CommitteeIn 2013, the Remuneration Committee was established to ensure appropriate policies for fair employee and Board pay. The Remuneration Committee consists of three members elected by the Board among its members:

Jørgen Huno Rasmussen (Chairman), Jeppe Christiansen, Jakob Topsøe.

Innovation CommitteeIn 2016, the Innovation Committee was established and tasked with helping to ensure that Topsoe remains a leader in catalytic innovations within its business areas. The Innovation Committee consists of two members elected by the Board among its members:

Jens K. Nørskov (Chairman), Christina Topsøe, non-Board member Henrik Topsøe and management representatives from the Topsoe Group.

30coRPoRAtE GoVERnAncE ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

Corporate GovernanceOurLeadership

Governance

Shareholderstopsøe Family

Donation CommitteeIn addition to the Board Committees, Topsoe has a Donation Committee, which reviews incoming requests for donations and support that Topsoe provides to local communities. The Donation Committee consists of a member from the Board of Directors of Haldor Topsøe Holding A/S, a member of the Topsøe family, and management representatives from the Topsoe Group. Currently, the members are:

Birgitte Øigaard (Chairman), Christina Topsøe, Bjerne S. Clausen, and Peter Rønnest Andersen.

A current list of all members of the above committees is available on our corporate website: www.topsoe.com/about/governance.

Executive committee

The responsibility for the daily operations of Topsoe lies with the Executive Committee. The team meets weekly and consists of the CEO, the Deputy CEO, the CFO, and the EVPs of the Refinery and Sustainables Business Units. Responsibilities include overall business conduct, drafting, setting, and implementing strategies and policies, and ensuring sufficient reporting to the Board of Directors.

compliance & behavior

Understanding external expectations, working diligently to meet these requirements, and staying true to the Topsoe Spirit is fundamental to Topsoe.

Our code of conduct and underlying policies and procedures ensure that we comply with applicable international laws and regulations. The Topsoe Spirit defines our company values and guides our interactions, decisions, and actions.

Assurance & development

Operating in a financially responsible manner, improving and certifying processes to meet high business standards, and developing our people are important elements to ensure a sustainable business model.

Both external and internal measures are taken to audit, review, and continuously develop our processes as well as our most valuable asset, our employees.

Assurance & development

External audits of compliance, financials, and environmental

obligations

Internal audits of compliance, financials, and

quality procedures

Employee

engagement and talent

development

Compliance & behavior

Applicable laws & regulations

code of conduct

topsoe Spirit

Board of Directors

Innovation committee

Finance committee

Remuneration committee

donation committee Executive Committee

OrganizationBusiness, resource, and support units

31coRPoRAtE GoVERnAncE ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

OurLeadership

Jørgen Huno Rasmussen Vice chairman

Jørgen Huno Rasmussen is chairman of the Boards of LFI A/S and the Lundbeck Foundation. He is Vice chairman of the Boards of terma A/S and Rambøll Group A/S. He is a member of the Boards of otto Mønsted A/S, thomas B. thriges Foundation and Bladt Industries A/S. Mr. Rasmussen has previously been cEo of FLSmidth & co. A/S and Hoffmann A/S. He holds an MSc and a Phd from the technical university of denmark, and a Graduate diploma in Business Administration from copenhagen Business School, where he is Adjunct Professor.

Jens Kehlet Nørskov Member

Jens K. nørskov is the Villum Kann Rasmussen Professor in the catalysis theory center at the technical university of denmark (dtu). dr. nørskov has previously been Professor at the School of Engineering at Stanford university. He is a member of the editorial board of several journals and has received a large number of honors and awards. dr. nørskov is also a member of several boards, advisory boards and professional organizations. He holds a Phd from Aarhus university.

Anders Heine Jensen Member

Anders Heine Jensen is cEo of Mt Højgaard A/S. He has previously been cEo of Burmeister Wain Scandinavian contractors A/S and Senior director with Ørsted (donG Energy). Mr. Jensen is a member of the Board of directors of Monberg & thorsen A/S, member of the central Board of the confederation of danish Industry and member of the Board of danish Building Materials Federation. He holds an MSc in Mechanical Engineering and Energy from the technical university of denmark and a Graduate diploma in Business Administration from copenhagen Business School.

Board of Directors

Christina Teng Topsøe Member

christina teng topsøe is a former lawyer and practiced law in London and Singapore for Allen & overy and Simpson, thacher and Bartlett. Ms. topsøe is a member of the Boards of Haldor topsøe Holding A/S and IGM Biosciences Inc. She studied chinese at the university of copenhagen / Peking university and law at the university of London. She holds an MBA from London Business School and columbia Business School.

Jeppe Christiansen chairman

Jeppe christiansen is cEo of Maj Invest Holding A/S. Mr. christiansen is deputy chairman of the Boards of directors of Maj Bank A/S, novo nordisk A/S, and Symphogen A/S. He is a member of the Boards of novo Holdings A/S and KIRKBI. In addition, Mr. christiansen is a member of the Executive Management of Maj Invest Equity A/S, det Kgl. Vajsenhus, and EMLIKA ApS. He holds an MSc in Economics from the university of copenhagen.

Jakob Haldor Topsøe Vice chairman

Jakob Haldor topsøe is chairman of the Board of Haldor topsøe Holding A/S and a member of the Boards of IGM Biosciences Inc., Motortramp A/S, and dampskibsselskabet orients Fond A/S. Mr. topsøe is Associated Partner at AMBRoX capital A/S. He has previously been Head of Equities at ABn AMRo Bank in denmark. Mr. topsøe holds a Graduate diploma in Business Administration from the copenhagen Business School.

32BoARd oF dIREctoRS ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

Board of DirectorsOurLeadership

Jette Søvang Christiansen Employee representative

Jette Søvang christensen is Quality Assurance Manager in catalyst Production. Ms. christiansen holds an Academy Profession degree in technology. She has been with topsoe since 1986.

Christina Borch Employee representative

christina Borch is Process Specialist in catalyst Production. She has been with topsoe since 1992, working with R&d, product management and production. Ms. Borch holds an Academy Profession degree in technology.

Anders Broe Bendtsen Employee representative

Anders Broe Bendtsen is Senior Patent counsel in Legal. He has been with topsoe since 2010 and has been a member of the Works council and chairman of the topsoe Engineers company Group. Mr. Bendtsen holds a Phd in chemical Engineering from the technical university of denmark and is a registered European Patent Attorney.

Lis IbsenEmployee representative

Lis Ibsen is Research Specialist in Research & development, where she has been working with developing, testing, and characterization of catalysts since 1998. Ms. Ibsen holds a Professional Bachelor’s degree as a Laboratory technician specializing in chemistry.

33BoARd oF dIREctoRS ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

OurLeadership

Executive Committee

Peter Rønnest Andersen cFo

Peter Rønnest Andersen has been a member of the Executive committee as Executive Vice President and chief Financial officer (cFo) since 2013. Before that, Mr. Andersen was with the A.P. Moller - Maersk Group for more than 20 years, including 15 years as cFo and a member of the executive committee in various divisions, of which five years as Senior Vice President and cFo of Maersk Line. Mr. Andersen has extensive board experience as a chairman and a member of the boards of a number of companies and joint ventures in denmark and several other countries.

Mr. Andersen holds an MSc in Economics from the university of Aarhus, denmark, and an Executive MBA from IMd, Switzerland. He has completed extensive leadership training at cranfield School of Management (uK), Penn State university (uSA), and Harvard university (uSA).

Bjerne S. Clausen President and cEo

Bjerne S. clausen has been President and cEo since 2011. He joined the Executive committee in 2006 as director of Research & development and became Executive Vice President of the technology division in 2008. dr. clausen joined topsoe in 1979.

dr. clausen holds an MSc and a Phd in Materials Science from the technical university of denmark (dtu) and was awarded an honorary doctorate from dtu in 2014. dr. clausen is Adjunct Professor at both dtu and university of Aarhus, denmark, and has been appointed Visiting Professor at the Business School of nankai university, china.

dr. clausen has served on numerous research and industrial boards and committees. He is currently chairman of the Board of inAno, the Interdisciplinary nanoscience center, university of Aarhus, he is a member of the Advisory Board of the department of chemical Engineering, dtu as well as a member of the confederation of danish Industry's committee on Business Policy.

Amy Hebert deputy cEo and EVP chemical Business unit

Amy Hebert joined topsoe as deputy cEo and Executive Vice President, chemical Business unit, in February 2018. Previously, she has been Vice President Europe with celanese and Global Vice President catalysts with Albemarle. She has more than 20 years’ experience from the chemical industry. Ms. Hebert is responsible for the chemical catalysts and licensing business unit as well as the regional offices.

Ms. Hebert holds a B.S. in chemical Engineering from Georgia Institute of technology, Atlanta, Georgia.

Ms. Hebert has been a member of the board of cefic (the European chemical Industry council) and a number of joint venture companies.

34EXEcutIVE coMMIttEE ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

Executive ManagementOurLeadership

Morten Schaldemose EVP, Refinery Business unit

Morten Schaldemose has been Executive Vice President and head of Refinery Business unit since 2013. Mr. Schaldemose is responsible for the company’s products and services to the refining industry. He has held a number of positions in topsoe centered on the refinery business, including Head of Marketing and Sales. Mr. Schaldemose joined topsoe in 1997 after working at Kuwait Petroleum International. In an interim period, he served as coo and cEo of a number of cleantech companies before rejoining topsoe.

Morten Schaldemose holds an MSc in chemical Engineering from the technical university of denmark and an EMBA with distinction from InSEAd.

Kim Grøn Knudsen EVP, Sustainables Business unit

Kim Grøn Knudsen is Executive Vice President, Sustainables Business unit. He has been a member of the Executive Management since 2012. He has held a number of positions within topsoe’s Research & development unit, including Vice President. Mr. Knudsen joined topsoe in 1996, leaving a position as Research Associate Professor at the technical university of denmark.

Mr. Knudsen holds a MSc and a Phd in chemical Engineering from the technical university of denmark.

Mr. Knudsen holds several patents and is the author and co-author of more than 55 papers.

35EXEcutIVE coMMIttEE ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


FinancialStatements

AuditorsReport

OurLeadership

FInAncIAL StAtEMEntS ANNUAL REPORT 2018 HALDOR TOPSOE A/S 36


topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Financial statements

37FInAncIAL StAtEMEntS ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Financial statementsConsolidated financial statements

Consolidated income statement

DKK million Note 2018 2017

Continuing operations

Revenue 3 5,617 5,011

Change in inventories of finished goods and intermediate products 63 -139

Other operating income 4 103 15

Purchased equipment for contract work -606 -578

Raw materials and consumables used -1,599 -1,162

Other external expenses -958 -756

Gross profit 2,620 2,391

Staff expenses 5 -1,656 -1,539

EBITDA 964 852

Depreciation, amortization and impairment losses 6 -256 -257

EBIT 708 595

Result of investment in joint venture 7 -10 -30

Financial income 8 71 73

Financial expenses 9 -77 -109

Profit before tax 692 529

Tax 10 -185 -126

Profit from continuing operations 507 403

Loss from discontinuing operations 41 -16 -422

Net profit 491 -19

Profit attributable to:

Owners of the parent company 490 -19

Non-controlling interest 1 0

Net profit 491 -19

38CONSOLIDATED FINANCIAL STATEMENTS ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Consolidated statement of comprehensive income


Net profit 491 -19

Foreign currency translation adjustment 20 38 -175

Recycling currency translation adjustments from discontinuing operations 41 0 24

Derivative financial instruments used for hedging of future cash flows 20 -3 12

Realized derivative financial instruments transferred to financial income/expense 20 -6 1

Tax on this 20 1 -3

Fair value adjustment of financial assets available-for-sale 20 -39 -26

Tax on this 20 1 -4

Other 20 -4 0

Revaluation of land and buildings 20 30 0

Tax on this 20 -7 17

Items that may be reclassified to the income statement 11 -154

Actuarial adjustments on pension obligations -2 13

Tax on this 0 -5

Items that will not be reclassified to the income statement -2 8

Other comprehensive income 9 -146

Total comprehensive income 500 -165

Attributable to:

Owners of the parent company 500 -165

Non-controlling interests 0 0

Total comprehensive income 500 -165

Continuing operations 516 257

Discontinuing operations -16 -422

Total comprehensive income attributed to the owners of the parent company 500 -165



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Consolidated balance sheet

AssetsDecember 31 December 31


Rights 16 19

Patents 41 45

Software 15 20

Intangible assets under construction 4 0

Intangible assets 11 76 84

Land and buildings 782 759

Plant and machinery 740 791

Other fixtures and equipment 215 241

Property, plant and equipment under construction 345 250

Property, plant and equipment 12 2,082 2,041

Investment in joint venture 0 0

Finance lease receivables 8 0

Other securities and investments 344 316

Other receivables 21 54

Investments 13 373 370

Non-current assets 2,531 2,495

Inventories 14 1,138 1,043

Trade receivables 15 717 995

Contract work in progress 16 187 173

Receivables from the parent company 17 190 371

Finance lease receivables 13 1 0

Other receivables 18 121 215

Prepayments 18 35

Receivables 1,234 1,789

Cash 761 862

Current assets 3,133 3,694

Assets 5,664 6,189



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Consolidated balance sheet

Equity and liabilitiesDecember 31 December 31


Share capital 19 376 376

Revaluation reserve 20 221 198

Foreign currency translation reserve 20 54 20

Reserve for unpaid share capital 20 241 241

Reserve for value adjustment of hedging instruments 20 -2 6

Reserve for financial assets measured at fair value 20 138 177

Retained earnings 258 646

Equity attributed to the owners of the parent company 1,286 1,664

Non-controlling interest 10 0

Total equity 1,296 1,664

Pension obligations and similar obligations 22 43 30

Deferred tax 23 381 522

Provisions 24 287 255

Bonds 25 499 499

Mortgage debt 25 27 30

Credit institutions 25 698 575

Lease obligations 25 129 130

Other payables 26 2 3

Non-current liabilities 2,066 2,044

Bonds 25 0 499



Deferred income 25 14 1

Prepayments from customers 27 418 229


Trade payables 395 382

Corporate income tax 216 78


Current liabilities 2,302 2,481

Liabilities 4,368 4,525

Equity and liabilities 5,664 6,189



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Consolidated statement of changes in equity

DKK millionShare

capital ReservesRetained earnings Total

Non- controlling

interestTotal

equity

Equity at January 1, 2018 376 642 646 1,664 0 1,664

Net profit 0 0 490 490 1 491

Other comprehensive income 0 10 -2 8 0 8

Comprehensive income 0 10 488 498 1 499

Capital increase in subsidiaries 0 0 0 0 8 8

Change in minority 0 0 -1 -1 1 0

Dividend 0 0 -875 -875 0 -875

Transactions with owners 0 0 -876 -876 9 -867

Equity at December 31, 2018 376 652 258 1,286 10 1,296

DKK millionShare

capital ReservesRetained earnings Total

Non- controlling

interestTotal

equity

Equity at January 1, 2017 376 796 1,066 2,238 51 2,289

Adjustment of non-controlling interest 0 0 -75 -75 -51 -126

Adjusted equity at January 1, 2017 376 796 991 2,163 0 2,163

Net profit 0 0 -19 -19 0 -19

Other comprehensive income 0 -154 8 -146 0 -146

Comprehensive income 0 -154 -11 -165 0 -165

Dividend 0 0 -334 -334 0 -334

Transactions with owners 0 0 -334 -334 0 -334

Equity at December 31, 2017 376 642 646 1,664 0 1,664



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Consolidated cash flow statement


Net profit 491 -19

Adjustments for non-cash items 36 473 428

Change in working capital 37 410 -100

Cash flows from operating activities before financial items and tax 1,374 309

Interest received, etc. 50 55

Interest paid, etc. -77 -126

Cash flows from ordinary activities 1,347 238

Corporation tax paid -158 -101

Cash flows from operating activities 1,189 137

- Of which continuing operations 1,205 421

Purchase of intangible assets -20 -31

Sale of intangible assets 45 0

Purchase of property, plant and equipment -251 -211

Sale of property, plant and equipment 30 0

Purchase of non-current financial assets -134 -42

Sale of fixed asset investments 60 31

Sale of emissions control business areas 0 919

Dividend received 16 24

Business combination, net cash 34 0

Cash flows from investing activities -220 690

Raising of long-term loans 299 0

Repayment of long-term loans -626 -126

Non-controlling interest's payment of share capital 8 -126

Dividend paid -875 -334

Cash flows from financing activities -1,194 -586

Change in cash and cash equivalents -225 241

Cash and cash equivalents at January 1 991 790

Foreign currency translation adjustments -5 -40

Cash and cash equivalents at December 31 761 991

Cash 761 862

Deposits with the parent company 0 129

Cash and cash equivalents at December 31 761 991



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Consolidated notes

Notes to the consolidated financial statements

List of notes

Note 1 Accounting policies 45

Note 2 Key accounting estimates and judgements 51

Note 3 Revenue 52

Note 4 Other operating income 52

Note 5 Staff expenses 53

Note 6 Depreciation, amortization and impairment losses 53

Note 7 Result of investments in joint venture 53

Note 8 Financial income 54

Note 9 Financial expenses 54

Note 10 Tax 54

Note 11 Intangible assets 55

Note 12 Property, plant and equipment 56

Note 13 Investments 59

Note 14 Inventories 61

Note 15 Trade receivables 61

Note 16 Contract work in progress 62

Note 17 Receivables from the parent company 62

Note 18 Other receivables 62

Note 19 Share capital 62

Note 20 Reserves 63

Note 21 Dividend 64

Note 22 Pension obligations and similar obligations 64

Note 23 Deferred tax 66

Note 24 Provisions 66

Note 25 Non-current liabilities 67

Note 26 Other payables 68

Note 27 Prepayments from customers 68

Note 28 Assets provided as security 68

Note 29 Guarantees 69

Note 30 Contractual obligations 69

Note 31 Contingent liabilities 69

Note 32 Fee to auditors appointed at the general meeting 69

Note 33 Related parties 70

Note 34 Derivative financial instruments 70

Note 35 Financial assets and liabilities 71

Note 36 Adjustments for non-cash items 74

Note 37 Change in working capital 74

Note 38 Subsequent events 74

Note 39 List of group companies 75

Note 40 Business combinations 76

Note 41 Discontinuing operations 77



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 1Accounting policies

Basis of preparation

the consolidated financial state-ments of Haldor topsoe A/S have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the Eu, as well as additional danish disclo-sure requirements applying to large enterprises of reporting class c.

the accounting policies are un-changed from last year, except from what is mentioned below.

New standards, amendments and interpretations adopted by Topsoethe following standards have been implemented by topsoe for the finan-cial year 2018:

> IFRS 9 “Financial instruments: classification and measurement of financial assets and financial liabilities”. the standard contains requirements for the classification and measurement of financial assets and liabilities, impairment methodology and general hedg-ing accounting. IFRS 9 has had an insignificant impact on the consol-idated financial statements. the implementation has resulted in additional disclosures. the basis for calculating the provision for bad debt has been changed from incurred losses to expected losses. However, this has had only insignif-icant impact on the provision and thereby the consolidated financial statements. the standard has been implemented retrospectively using January 1, 2018 as the date of initial application. the Group has made use of the relief from restating the comparative figures. upon initial application of IFRS 9, "other securities and investments" previously classified as available for sale have been designated at fair value through other comprehensive income. Please refer to note 15 for further information.

> IFRS 15 ”Revenue from contracts with customers”: the standard

establishes a single framework for revenue recognition. the imple-mentation of IFRS 15 has had an insignificant impact on the consol-idated financial statements. the implementation has resulted in additional disclosures. the stand-ard was implemented using the modified retrospective method. the Group has made use of the relief from restating comparative figures and has applied IFRS 15 only to contracts that were not completed as of January 1, 2018.

> IFRIc 22 “Foreign currency transla-tion and advance consideration”: IAS 21 requires an enterprise to use the exchange rate at the date of the transaction which is defined as the date on which the transaction first qualifies for recognition. the Group has assessed the impact of the new interpretation and conclud-ed that it has no significant impact on the consolidated financial state-ments.

New standards, amendments and interpretations not yet effectivethe following new standards, amend-ments and interpretations have been adopted by the IASB and adopted by the Eu. topsoe will adopt the stand-ards when they become effective:

> IFRS 9 “Financial instruments”: A minor amendment concerning the classification of receivables in situations where a borrower has a prepayment option and where such prepayment has negative consequences for the borrower. the receivables are to be measured at amortized cost or fair value with adjustments through other com-prehensive income if certain criteria are met. the amendment will be effective for the financial year be-ginning on January 1, 2019. topsoe has assessed that the standard will not have a significant impact on the consolidated financial statements. However, implementation of the standard will impact disclosures.

> IFRS 16 “Leases”: Going forward, the lessee is required to recognize all leases as a lease liability and a lease asset in the balance sheet

with two exceptions: short-term leases (less than 12 months) and leases relating to low-value assets. It must furthermore be considered whether the agreement is a lease or a service arrangement. In the income statement, the lease ex-pense is replaced by depreciation of the asset and an interest expense for the financial liability. the current rules remain largely unchanged for the lessor. consequently, leases are still to be classified as finance leases and operating leases.

the standard will be implemented on January 1, 2019, using the mod-ified retrospective approach, where the lease liability is determined on that date and the right-of-use assets are measured at an amount equal to the lease liability. compar-ative figures are not restated.

topsoe has assessed the impact of the new standard once implement-ed:

Balance sheets will gross up by approximately dKK 545 million for right-of-use assets and dKK 544 million for lease liabilities, measured at the present value of the remain-ing lease payments discounted using the incremental borrowing rate per country. the discrepancy between right-of-use assets and lease liabilities is the adjustment of the prepaid lease payments before the date of initial application. the income statement will not be sig-nificantly impacted. However, the related key ratios in the consolidat-ed financial statements, such as EBItdA and RoIc, will be impacted.

Furthermore, the implementation of IFRS 16 will impact disclosures.

> IFRIc 23 ”uncertainty over income tax treatments”: the interpretation clarifies that it must be determined whether each tax position is to be treated individually or collectively with other uncertain tax positions. the assessment should be based on the assumption that the tax au-thorities have the same knowledge of the enterprise’s circumstances and, therefore, the assessment



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


should disregard any detection risk. this determination may be based on e.g. how tax statements are prepared, or how the enterprise expects the tax authorities to treat the uncertain tax positions. the uncertain tax position must be recognized if it is probable that the enterprise will have to pay or receive refunds. the uncertain tax position must be measured so as to better reflect the receivable/liability and the related uncertainty. the amendment will be effective for financial years beginning on or after January 1, 2019. topsoe has assessed that the standard will not have a significant impact on the consolidated financial statements.

The IASB has issued the following new standards, amendments and new interpretations that are relevant to Topsoe, but which have not yet been adopted by the EU:> IAS 19 “Employee Benefits”: the

amendment consists of a minor clarification of IAS 19 regarding remeasurement of defined benefit plans. When pension obligations are remeasured due to an amendment, a curtailment or termination of a pension plan, service costs and net interest for the period after the remeasurement must be deter-mined based on the assumptions used for the remeasurement.

> the net interest for the remaining period is calculated on the basis of the remeasured defined bene-fit liability or asset.

> However, the service costs and net interest for the financial pe-riod preceding such amendment, curtailment or termination of a pension plan are not affected by the remeasurement.

the amendment will be effective for financial years beginning on January 1, 2019.

> IAS 28 ”Investments in associates and joint ventures”: A clarification that enterprises are to apply IFRS

9, including the requirements for impairment of financial assets, on recognition of long-term invest-ments even though such receiva-bles are considered part of the net investment in the associate or joint ventures under IAS 21. the amend-ment will be effective for financial years beginning on January 1, 2019.

> Annual improvements (2015-2017): Include three minor clarifications:

> IAS 12 ”Income taxes”: Income tax consequences of dividends should be recognized in profit or loss, see IAS 12.

> IAS 23 ”Borrowing costs”: Borrow-ing costs incurred on specific-pur-pose borrowing may subsequent-ly change into borrowing costs on general borrowing, see IAS 23.

> IFRS 3 “Business combinations”: clarifies that a step acquisition of a joint venture by which an en-terprise obtains control must be treated in accordance with IFRS 3.

the amendments will be effective for financial years beginning on or after January 1, 2019.

the above standards and interpre-tations will be applied when they become effective. none of these are expected to have a significant impact on the consolidated financial state-ments of topsoe.

General

the consolidated financial state-ments have been prepared in accord-ance with the historical cost conven-tion, except for the following items that are stated at fair value:

> Land and buildings> Financial assets measured at fair

value through other comprehensive income

> derivative financial instruments

Part of the information required by IFRS appears from Management’s Review. the remaining information appears from the following sections.

Consolidationthe consolidated financial state-ments comprise the parent company, Haldor topsoe A/S, and enterprises in which the parent company directly or indirectly holds the majority of the voting rights or in which the parent company through share ownership or otherwise exercises control.

consolidation is performed by summa-rizing the financial statements of the parent company and group enter-prises, which have been prepared in accordance with the Group’s account-ing policies.

on consolidation, elimination is made of intercompany income and expenses, shareholdings, dividends and accounts as well as of realized and unrealized profits and losses on transactions between the consolidat-ed enterprises.

the parent company’s investments in consolidated group enterprises are set off against the parent company’s share of the net asset value of group enterprises at the time of consolida-tion.

the non-controlling interest’s share of profit for the year and of equity in subsidiaries which are not whol-ly owned is included as part of the Group’s profit and equity, respectively, but shown as separate items.

Business combinationson acquisition of new enterprises, the purchase method is applied. cost is measured at fair value of the consideration. Identifiable assets and liabilities and contingent liabili-ties acquired in connection with the business combination are initially measured at fair value at the date of acquisition. Any positive differences between cost and fair value of the acquired identifiable net assets are recognized as goodwill. Goodwill is adjusted until 12 months after the date of acquisition if it turns out that the identifiable assets, liabilities and contingent liabilities have another fair value than determined at the date of acquisition.

Note 1Accounting policies (continued)



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


newly acquired enterprises are recog-nized from the date of acquisition and comparatives are not restated.

In stepwise acquisitions, value ad-justments of previously recognized investments are recognized in the income statement. the effect of the purchase of non-controlling interests without change of control is included directly in equity.

Functional and presentation currencyItems in the financial statements of each of the Group’s enterprises are presented in the currency used in the primary economic environment in which the enterprise operates. the consolidated financial statements are presented in danish kroner (dKK), which is the functional and presenta-tion currency of the parent company.

Translation policiesForeign currency transactions are translated into the functional curren-cy using the exchange rates prevailing at the date of transaction on initial recognition. Foreign currency mon-etary items are translated into the functional currency at the exchange rates prevailing at the balance sheet date.

Financial statements of group enter-prises with another functional curren-cy than danish kroner are translated into danish kroner using the exchange rates prevailing at the balance sheet date for balance sheet items and average exchange rates for income statement items.

Realized and unrealized foreign ex-change gains and losses are recog-nized in financial income and financial expenses, except for unrealized losses and gains arising from hedging of future cash flows, which are recog-nized through comprehensive income under reserve for value adjustment of hedging instruments. In addition, the following currency translation differences are recognized through

comprehensive income under the foreign currency translation reserve, using the exchange rates prevailing at the balance sheet date:

> translation of group enterprises’ net assets at the beginning of the financial year.

> translation of group enterprises’ income statements from average exchange rates to the exchange rates prevailing at the balance sheet date.

> translation of non-current in-tercompany balances that are considered an addition to the net investment in group enterprises.

Derivative financial instrumentsderivative financial instruments are initially recognized in the balance sheet at fair value and are subse-quently remeasured at their fair val-ues. Positive and negative fair values of derivative financial instruments are recognized in “other receivables” and “other payables”.

changes in the fair values of deriva-tive financial instruments that qualify as hedges of expected future cash flow are recognized through compre-hensive income. Amounts recognized through comprehensive income are transferred to the income statement in the period when the hedged item affects the income statement.

changes in the fair values of deriva-tive financial instruments that do not qualify as hedges are recognized in the income statement. the fair values of derivative financial instruments are determined based on prices obtained from stock exchanges or other relia-ble data sources.

Non-current assets (or disposal groups) held for sale and discontinuing operations non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recov-ered principally through a sale trans-action rather than through continuing use and a sale is considered highly probable. they are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets,

assets arising from employee benefits and financial assets that are carried at fair value, which are specifically exempt from this requirement.

An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is rec-ognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of sale or disposal.

non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attrib-utable to the liabilities of a disposal group classified as held for sale con-tinue to be recognized.

non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. the liabil-ities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinuing operation is a com-ponent of an entity that has been disposed of or is classified as held for sale and which represents a separate major line of business or geographi-cal area of operations or is part of a single coordinated plan to dispose of such a line of business or area of op-erations. the results of discontinuing operations are presented separately in the income statement.

Income statement

RevenueRevenue from the sale of finished goods is recognized in the income statement when control has been transferred to the customer, i.e. when goods are delivered. Revenue is rec-




topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


ognized exclusive of VAt and net of discounts relating to sales.

contract work in progress is recog-nized based on the stage of com-pletion, which means that revenue equals the selling price of the work completed for the year (percent-age-of-completion method). this method is applied when total revenue and expenses in respect of the contract and the stage of completion at the balance sheet date can be measured reliably, and it is probable that economic benefits, including payments, will flow to the Group.

Other operating income other operating income comprises income of a secondary nature to the Group’s core activities, including gov-ernment grants provided for research projects.

Purchased equipment for contract workPurchased equipment for contract work comprises hardware etc. related to engineering projects.

Raw materials and consumables usedRaw materials and consumables used comprise raw materials and consuma-bles consumed to achieve revenue for the year.

Other external expensesother external expenses comprise expenses for premises, sales and distribution as well as office expens-es, etc.

Government grantsGovernment grants received for research and development projects are recognized in “other operating income” as the projects progress. Grants received for investment in property, plant and equipment are set off against the related property, plant and equipment, if directly related. otherwise grants are recognized as deferred income and systematically recognized in “other external expens-es” over the useful life of the asset.

LeasesLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classi-fied as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the lease term. the liability related to non-can-cellable leases is disclosed in the notes.

Leases where the Group has sub-stantially all the risks and rewards of ownership are classified as financial leases. Financial leases are capital-ized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. the property acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term. the corresponding lease obligation is included in liabilities.

Taxtax consists of current tax for the year, deferred tax as well as any adjustments to prior years. tax at-tributable to the profit for the year is recognized in the income statement, whereas tax attributable to other comprehensive income transactions is recognized through other compre-hensive income.

Haldor topsoe A/S and danish group enterprises are jointly taxed. tax for the individual companies is allocated fully on the basis of expected taxable income.

Balance sheet

Intangible assetsDevelopment projectsdevelopment projects that are clearly defined and identifiable and in respect of which technical feasibility, suffi-cient resources and a potential future market or development opportunity in the enterprise can be demonstrated, and where it is the intention to man-ufacture, market or use the project, are recognized as intangible assets. this applies if sufficient certainty exists that the value in use of future earnings can cover the cost of sales

and distribution involved as well as the development costs.

development projects that do not meet the Group’s criteria for recogni-tion in the balance sheet and research expenses are recognized as expenses in the income statement as incurred.

Other intangible assetsRights and patents are measured at cost less accumulated amortization and impairment losses. Both rights and patents are amortized on a straight-line basis over the remaining patent term, but not exceeding 10 years, due to the notoriously fast development in applied technologies and related uncertainty about longer amortization period.

Internally developed software for ma-jor projects is measured at cost less accumulated amortization and impair-ment losses. Software is amortized on a straight-line basis over 4 years.

other intangible assets are tested for impairment when there is an indica-tion of impairment. Material impair-ment indicators which may lead to an impairment test are similar to those stated in the section on property, plant and equipment.

Impairment losses relating to other intangible assets are reversed if the recoverable amount subsequently increases.

Gains or losses from divestment of intangible assets are recognized in the income statement under “other external expenses”.

Property, plant and equipmentPlant and machinery and other fix-tures and equipment are measured at cost less accumulated depreciation and impairment losses. Land and buildings are measured using the re-valuation model at cost with the addi-tion of revaluations less accumulated depreciation and impairment losses. Property, plant and equipment under construction are measured at cost.

cost comprises the cost of acquisi-tion and expenses directly related to the acquisition up until the time when




topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


the asset is ready for use as well as costs of restoration to the extent that a provision is recognized at the same time.

In the case of assets of own con-struction, cost comprises direct and indirect expenses for labor, materials, components and sub-suppliers. Bor-rowing costs related to construction of major property, plant and equip-ment are recognized in cost over the period of construction.

Revaluations of land and buildings are performed on the basis of Manage-ment’s estimate of fair value which is based on an independent valuation. Revaluations less depreciation and deferred taxes are transferred to the revaluation reserve under equity.

Property, plant and equipment are divided into sub-assets if the future useful life of the individual assets is different.

depreciation based on cost and reval-uations reduced by any residual value is calculated on a straight-line basis over the expected useful lives of the assets, which are:

Buildings 13–40 yearsPlant and machinery 5–10 yearsother fixtures and equipment 4–20 years

Land is not depreciated.

the residual value and useful lives of the assets are assessed annually and adjusted if necessary at the balance sheet date.

Property, plant and equipment are tested for impairment when there is an indication of impairment. Impair-ment indicators comprise e.g.:

> Reduced earnings compared to expected future results.

> Material negative development trends in the sector or the economy in the enterprise’s markets.

> damage to the asset or changed use of the asset.

Impairment losses relating to proper-ty, plant and equipment are reversed if the recoverable amount subse-quently increases.

Gains and losses from sale of proper-ty, plant and equipment are recog-nized in the income statement under “other external expenses”.

Investment in joint ventureInvestment in joint venture is recog-nized and measured under the equity method.

the item “Result of investment in joint venture” in the income statement includes the proportionate share of the result after tax.

Other securities and investmentsInvestments are measured at fair value at the balance sheet date.

Fair value adjustments are recognized through other comprehensive income under the “Reserve for financial as-sets measured at fair value”.

Securities in the form of loans are measured in the balance sheet at am-ortized cost less expected credit loss.

Inventories Inventories are measured at cost under the FIFo method. cost is deter-mined using a standard cost method that includes direct and indirect production costs. direct produc-tion costs comprise raw materials, consumables and direct labor costs, whereas indirect production costs comprise indirect materials and labor costs, maintenance and depreciation of machinery, production buildings and equipment used in the production process as well as the cost of plant administration and management.

Please refer to note 2 "Key account-ing estimates and judgements" for information about write-downs.

ReceivablesReceivables are measured in the balance sheet at amortized cost less expected credit loss.

Contract work in progresscontract work in progress is meas-ured at the selling price of the work completed calculated on the basis of the stage of completion. the stage of completion is determined on the basis of the share of contract costs incurred compared to the total expected contract costs. this method is found to be the best and most prudent method to reflect the progress. Where it is probable that total contract expenses will exceed the total revenue from a contract, the expected loss is recognized as an expense in the income statement.

Where the selling price cannot be measured reliably, the selling price is measured at the lower of expenses incurred and net realizable value.

Prepayments are set off against contract work in progress. Received payments on account exceeding the performed share of contracts are de-termined separately for each contract and recognized in “contract work in progress” under current liabilities.

Expenses relating to sales work and the winning of contracts are recog-nized in the income statement as incurred.

Reservesthe revaluation reserve includes a reserve for revaluation of land and buildings after depreciation and deferred tax.

the foreign currency translation reserve comprises all translation adjustments arising from the transla-tion of financial statements of group enterprises using another functional currency than danish kroner as well as translation adjustments con-cerning non-current intercompany balances that are considered an addition to the net investment in such enterprises.

Reserve for unpaid share capital comprises the deviation between the amount by which the share capital has been increased and the amount paid.




topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Reserve for value adjustment of hedg-ing instruments comprises the accu-mulated net change in the fair value of hedging transactions which meet the criteria of future cash flow hedg-es and where the hedged transaction has not yet been completed.

Reserve for financial assets measured at fair value comprises the accumu-lated net change in the fair value of financial assets classified as financial assets measured at fair value through other comprehensive income.

DividendProposed dividend for the financial year is recognized in “Retained earn-ings”.

Pension obligations and similar obligationsthe costs of defined contribution plans are recognized in the income statement in the financial year to which they relate.

the costs and liabilities of defined benefit plans are determined in accordance with the projected unit credit method. the liability is calculat-ed annually by an actuary. Actuarial gains and losses are recognized in full in “other comprehensive income”. Plan assets are only recognized to the extent that the Group is able to derive future economic benefits such as refunds from the plan or reductions of future contributions.

costs related to other non-current staff benefits are accrued over the employees’ expected average working life.

Deferred taxdeferred income tax is measured us-ing the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities. the tax base of tax loss carryforwards is deducted from deferred tax when it is proba-ble that the losses may be utilized. deferred tax is measured on the basis

The key figures and financial ratios have been calculated as follows:

Gross margin = Gross profit x 100 Revenue EBITDA margin = EBIT + depreciation, amortization etc. x 100 Revenue

EBIT margin = EBIT x 100 Revenue

Return on invested capital

= EBIT x 100 Average invested capital

Equity ratio = Equity at year-end x 100 Total assets

Return on equity = Net profit x 100 Average equity


of the tax rules and tax rates expect-ed to be in force on elimination of temporary differences. Any changes in deferred tax due to changes in tax rates are recognized in the income statement with the share attributa-ble to the results for the year, unless they relate to items recognized either in other comprehensive income or directly in shareholders' equity.

ProvisionsProvisions are recognized when – in consequence of a previous event – the Group has a legal or constructive obligation and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured at Manage-ment’s estimate of the discounted amount expected to be required to repay the obligation.

Financial liabilitiesLoans such as bonds, mortgage loans and loans from credit institutions are recognized initially at the proceeds received net of transaction expenses incurred. Subsequently, the loans are measured at amortized cost, corresponding to capitalized value, using the effective interest rate; the difference between the proceeds and the nominal value is recognized in the income statement over the loan

period. other debts are measured at amortized cost, mainly corresponding to nominal value.

Deferred incomedeferred income comprises payments received in respect of income in sub-sequent years and is primarily related to government grants.

Other areas

Cash flow statementthe Group’s cash flow statement, which is prepared according to the indirect method, shows the Group’s cash flows for the year broken down by operating, investing and financing activities as well as the Group’s cash and cash equivalents at the beginning and end of the year.

the Group’s cash comprises the Group’s cash and cash equivalents and cash deposits with Haldor topsøe Holding A/S.

Financial highlightsthe financial ratios have been prepared in accordance with the Recommendations & Financial Ratios produced by the danish Finance Soci-ety and cFA Society denmark.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 2Key accounting estimates and judgements

In accordance with general account-ing policies, determination of the carrying amount of certain assets and liabilities requires assessments and estimates of future events. Assess-ments and estimates are performed based on historical experience and other factors which Management considers reasonable under the circumstances. these assumptions may be incomplete or inaccurate and unexpected issues may arise, which implies that the assessments and estimates made are subject to some uncertainty. Special risks for the Group appear from the Risk manage-ment section.

Land and buildingsthe Group’s land and buildings are measured in accordance with the revaluation model. Fair value is determined on the basis of a mar-ket-based estimate performed by an independent, qualified valuation expert. the frequency of an independ-ent valuation depends on the extent to which Management assesses that the market development shows signs of significant difference between the carrying amount and fair value. Please refer to note 12 for further informa-tion.

Other investmentsother investments are measured at fair value at the balance sheet date. to the extent that fair value cannot be derived from an active market, it is required that Management assesses and selects an appropriate method for determination of the fair value. In this case, the fair value is measured at the discounted value of expected future cash flows. Material assump-tions comprise expected future cash flows, discount rates and growth rates for the period. Please refer to note 13 for further information.

Inventorythe standard cost calculations are reviewed on a regular basis to ensure

that all relevant assumptions such as prices, output and capacity utilization are incorporated correctly. changes in the calculation method used to calculate indirect production costs may impact the gross margin and the overall measurement of inventories.

Inventories are written down to net realizable value if this is lower than cost. the need to write down inven-tories is primarily assessed based on negotiability and production quality. the net realizable value is calculated as the total of future revenue expect-ed to be generated in the process of normal operations and determined by allowing for marketability, obsoles-cence and development in expected selling price less selling expenses. Please refer to note 14 for further information.

Revenue from engineering projectsIn Management’s opinion, the Group’s sale of engineering projects is to a high degree individually adjusted, and contract work in progress is consequently measured at the selling price of the work completed based on the stage of completion. the stage of completion is determined on the basis of the share of contract costs incurred compared to the total expected contract costs. these costs are partly based on an estimate which to a high degree is based on historical experience. Expected income and costs of engineering projects may be adjusted along with the finalization of the projects and clarifications of uncertainties. Parallel changes to the engineering contract may occur and certain assumptions in the contract may not be met.

Warranty provision for engineering projectsthe evaluation of the warranty provi-sion for engineering projects is based on historical levels. Furthermore, the warranty provision also reflects the risks associated with bringing new technologies to the market as well as executing projects in countries with higher geopolitical risks. Please refer to note 24 for further information.

Contingent liabilities and lawsuitsAs part of the Group’s business, top-soe may become party to a lawsuit and/or dispute. In such cases, the potential liabilities and their likelihood are evaluated. the evaluation is based on available information and legal assessment from advisors. Assess-ing the final outcome of lawsuits/disputes is difficult and the outcome may thus deviate from the evaluation made by topsoe.

Research and development costsResearch costs are expensed when incurred. development costs which do not meet the requirements of capital-ization are expensed when incurred. Management assesses whether the capitalization requirements are met based on expectations of the technical possibility of completing the development project, expectations of the existence of a market for the product, etc.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 3Revenuethe Group's revenue can be divided into two main categories: catalyst sales and technology sales. catalyst sales comprise the sale of catalysts. technology sales comprise basic engineering design, license fee and hardware.

Revenue from catalyst sales is recognized when control has been transferred, which typically takes place based on Incoterms. the majority of catalyst sales are paid after delivery with typically 30-60 days of credit, but in certain situations the Group re-ceives prepayments.

Revenue from technology sales is recognized over time according to the percentage-of-completion method based on actual versus forecasted cost. technology sales are paid in installments during the contract’s life time. the Group strives to be cash flow positive on all technology contracts at any time during project execution.

the transaction price of a contract is allocated to performance obligations, e.g. delivered catalyst and delivered technology. technology is considered to be one performance obligation, since the deliveries must be treated as a whole and not as distinct elements.

DKK million 2018 2017

Catalyst 3,851 3,393

Technology 1,766 1,618

Total disaggregation of revenue from contract with customers 5,617 5,011

Future revenue regarding unsatisfied or partially unsatisfied performance obligations except perfomance obligations due within a year. The majority is realized in 2020. 472 -

Revenue recognized that was included in contract liability balance at the beginning of the year 813 -

Revenue recognized from performance obligations satisfied in previous periods 7 -

Trade receivables 717 995

Contract work in progress 187 173

Contract assets at December 31 904 1,168

Prepayments from customers 418 229

Contract work in progress 492 675

Contract liabilities at December 31 910 904

trade receivables decreased during the year, mainly due to large overdues being paid.

the increase in prepayments from customers mainly relates to prepayments from suspended contracts, part of which were trans-ferred from contract work in progress, liabilities to prepayments, liabilities.

contract work in progress recognized under liabilities decreased during the year due to progression and finalization of a number of technology contracts.

Note 4other operating incomeGovernment grants for research and development amounting to dKK 11 million (2017: dKK 8 million) have been recognized in the income statement under "other operating income".



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 5Staff expensesDKK million 2018 2017

Wages and salaries 1,391 1,281

Pensions – defined contribution plans 137 137

Pensions – defined benefit plans 6 8

Other social security contributions 138 135

Total 1,672 1,561

Capitalization of work performed on property, plant and equipment -16 -22

Total staff expenses 1,656 1,539

Executive Committee salary 22 22

Executive Committee pension 4 4

Fee to Board of Directors 7 7

Total remuneration to Executive Committee and Board of Directors 33 33

Average number of employees 2,246 2,527

Of which in Denmark 1,609 1,737

Note 6depreciation, amortization and impairment lossesDKK million 2018 2017

Rights 3 3

Patents 7 8

Software 10 14




Total depreciation, amortization and impairment losses 256 257

Note 7Result of investment in joint ventureDKK million 2018 2017

Share of result of joint venture -10 -30

Recognition of badwill -2 0

Fair value adjustment of investment in joint venture 2 0

Total result of investment in joint venture -10 -30



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 8Financial incomeDKK million 2018 2017

Dividend from other investments 16 24

Interest received from the parent company 2 2

Interest income 9 6

Gains on derivative financial instruments (currency) 5 0

Foreign currency translation adjustment 38 40

Other financial income 1 1

Total financial income 71 73

Note 9Financial expensesDKK million 2018 2017

Interest expenses 45 50

Loss on derivative financial instruments (interest) 0 1


Total financial expenses 77 109

Note 10taxDKK million 2018 2017

Current tax for the year 275 153

Change in deferred tax for the year -105 40

Change in corporate tax rate 0 -22

Adjustments to prior years 12 -3

Total tax 182 168

Tax on continuing operations 185 126

Tax on discontinuing operations -3 42

Total tax 182 168

% 2018 2017

Danish corporate tax rate 22.0 22.0

Non-deductible expenses 0.2 1.4

Income not subject to tax -0.2 -1.0

Differences in foreign tax rates 0.0 5.4

Adjustments relating to prior years 3.4 -0.2

Change in corporate tax rate 0.0 -3.8

Other adjustments 1.4 0.0

Effective tax rate 26.8 23.8



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 11Intangible assets

DKK million Rights Patents Software

Intangible assets under construction

Cost at January 1, 2018 25 115 169 0

Additions during the year 0 16 1 3

Disposals during the year 0 -44 -1 0

Transfers during the year 0 0 4 1

Cost at December 31, 2018 25 87 173 4

Amortization and impairment losses at January 1, 2018 6 70 149 0

Amortization for the year 3 7 10 0

Reversal of amortization and impairment losses on assets sold and scrapped 0 -31 -1 0

Amortization and impairment losses at December 31, 2018 9 46 158 0

Carrying amount at December 31, 2018 16 41 15 4

Research and development costs expensed in 2018 505



Cost at January 1, 2017 25 110 180 3

Foreign currency translation adjustment 0 0 -1 0


Disposals during the year -2 -13 -24 0

Transfers during the year 0 0 8 -8

Cost at December 31, 2017 25 115 169 0


Amortization for the year 3 8 18 0

Reversal of amortization and impairment losses on assets sold and scrapped 0 -6 -10 0



Research and development costs expensed in 2017 470



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 12Property, plant and equipment

DKK millionLand and buildings

Plant and machinery

Other fixtures and

equipment

Property, plant and

equipment under

construction

Cost at January 1, 2018 1,007 2,277 998 250

Foreign currency translation adjustment 4 21 0 6


Disposals during the year -2 -6 -2 -20


Cost at December 31, 2018 1,013 2,368 1,053 345

Revaluation at January 1, 2018 326 8 0 0



Revaluation at December 31, 2018 362 8 0 0

Depreciation and impairment losses at January 1, 2018 574 1,494 757 0


Depreciation for the year 18 136 82 0

Reversal of depreciation and impairment losses on assets sold and scrapped -1 -6 -2 0

Depreciation and impairment losses at December 31, 2018 593 1,636 838 0


Carrying amount at December 31, 2018, under the depreciated cost model 474 740 215 345

Borrowing costs capitalized in 2018 2

Where Management assesses that a revaluation is material, the properties in question have been revalued by an independent assessor in connection with closing of the accounts, latest in 2018.

Carrying amount of finance lease assets 122 0 0 0



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 12Property, plant and equipment (continued)


Plant and machinery

Other fixtures and

equipment

Property, plant and

equipment under

construction

Cost at January 1, 2017 1,280 3,547 1,019 317

Foreign currency translation adjustment -31 -148 -8 -14


Disposals during the year -244 -1,267 -124 -6


Cost at December 31, 2017 1,007 2,277 998 250


Foreign currency translation adjustment -18 0 0 0



Foreign currency translation adjustment -14 -87 -7 0


Reversal of depreciation and impairment losses on assets sold and scrapped -84 -760 -93 0




Borrowing costs capitalized in 2017 2

Carrying amount of finance lease assets 125 0 0 0



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 12Property, plant and equipment (continued)DKK million Level 1 Level 2 Level 3

Office buildings in Denmark 0 0 232

Production plants in Denmark and US 0 0 329

Excess land in US 0 99 0

Distribution of assets stated at fair value at December 31, 2018 0 99 561

DKK million Level 1 Level 2 Level 3

Office buildings in Denmark 0 0 231

Production plants in Denmark and US 0 0 336

Excess land in US 0 67 0


Level 1: Quoted prices (unadjusted) in an active market for identical assets.

Level 2: Input other than quoted prices included within level 1 that is observable for asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Input for assets that are not based on observable market data (i.e. unobservable inputs).

there have been no transfers between levels 1 and 2 during the year.

the fair value of office buildings in denmark has been derived using a market approach primarily based on rental per m2 for com-parable buildings and an interest rate. the rental per m2 is set at dKK 700-1,100 for office buildings and dKK 300-700 for storage and laboratories. the fair value of production plants has been derived using a cost approach, which reflects the cost of construct-ing similar buildings at an equivalent age and use. Excess land in uS is valutated using a sales comparison approach. Sales prices of comparable land in close proximity are adjusted for differences in key attributes such as property size. the sales price per acre is set at uSd 152,500.

the current use of land and buildings is considered to represent the highest and best use of the assets.

the valuation methods have not changed from last year.


Fair value of level 3 assets at January 1 567 773

Additions 4 2

Disposals -1 -160

Included in the income statement as depreciation -15 -22

Foreign currency translation adjustment 6 -26

Fair value of level 3 assets at December 31 561 567



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 13Investments

DKK million

Investment in joint

ventureFinance lease

receivables

Other securities

and investments

Other receivables

Cost at January 1, 2018 39 0 136 69



Disposals during the year 0 0 -2 -52

Transfers during the year -39 0 -2 2

Cost at December 31, 2018 0 9 208 27

Value adjustment at January 1, 2018 -39 0 180 -15

Net result for the year -10 0 0 0

Disposals during the year 0 0 -6 0

Value adjustments for the year 27 0 -38 -5

Investments with negative equity transferred to receivables -14 0 0 14

Transfers during the year 36 0 0 0

Value adjustment at December 31, 2018 0 0 136 -6


Of this, less than 1 year 1

DKK million

Investment in joint

venture

Other securities

and investments

Other receivables

Cost at January 1, 2017 39 141 68

Foreign currency translation adjustment 0 0 -3

Additions during the year 0 4 41

Disposals during the year 0 -9 -37

Cost at December 31, 2017 39 136 69

Value adjustment at January 1, 2017 -25 207 -17

Net result for the year -30 0 0

Disposals during the year 0 -2 17

Value adjustments for the year 1 -25 0

Investments with negative equity transferred to receivables 15 0 -15

Value adjustment at December 31, 2017 -39 180 -15

Carrying amount at December 31, 2017 0 316 54



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 13Investments (continued)

Investment in joint venture is specified as follows:

Ferrostaal Topsoe Projects GmbH, Essen, Germanythe joint venture Ferrostaal topsoe Project GmbH was fully acquired during 2018 and is now 100% owned by the Group and fully consolidated in the Group from August 2018. Ferrostaal topsoe Project GmbH has changed name to Haldor topsoe Germany GmbH.

Saturn FS Gas Chemicals LLC, Wilmington, Delaware, USAfter the Group has obtained 100% ownership of Haldor topsoe Germany GmbH as mentioned above, the Group became part of the joint venture Saturn FS Gas chemicals LLc. the Group owns 50% of the joint venture. the investment is measured under the equity method. the negative equity has been offset against receivables from the joint venture.

Other securities and investments are specified as follows:

Karnaphuli Fertilizer Limited, Bangladesh (KAFCO)the Group holds shares in KAFco of nominally Bdt 692 million, which equals 15.01% of the shares in KAFco. the shares are measured at fair value based on a discounted cash flow calculation on the basis of the present budgets and forecasts of KAFco. the calculation is moreover based on material assumptions in terms of growth rate and discount rate. the discount rate is determined based on Management's estimate of general capital market conditions and the specific risk profile and has been set at 11.4% (2017: 12.0%) after tax. the growth rate in the terminal period has by Management been estimated at 0% (2017: 0%). Based on these criteria, the KAFco shares have been written down by dKK 37 million (2017: dKK 42 million).

A change in the discount rate of -1% or +1%, respectively, would impact the value by -7% or +8%, respectively. A change in the growth rate in the terminal period of -10% or +10%, respectively, would impact the value by -8% or +7%, respectively.

Chambal Fertilizer and Chemical Ltd., Indiathe Group has an investment in chambal Fertilizer and chemicals Ltd., corresponding to 0.34% of the share capital. during 2018, the Group has sold 30% of the investment. the remaining investment has been sold in the beginning of 2019. the investment is measured at fair value based on listed market value.

GTLA Holding LP, USthe Group has invested in GtLA Holding LP, corresponding to 3% of the share capital. the purpose of the company is to develop a project regarding construction of a gas-to-liquid plant.

Ramagundam Fertilizers and Chemicals Limited, Indiathe Group has invested in Ramagundam Fertilizers and chemicals Limited, corresponding to 3.9% of the share capital. the compa-ny is constructing a fertilizer plant in India. the Group is obligated to invest an additional amount of up to InR 230 million.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 14InventoriesDKK million 2018 2017

Raw materials and consumables 273 258

Work in progress 135 115

Finished goods 730 670

Inventories at December 31 1,138 1,043

Cost of sales for the year 2,038 1,832

Impairment losses for the year 46 63

Reversed impairment losses for the year -34 -46

Reversal of impairment losses is attributable to disposal or reuse of impaired goods in the production.

Note 15trade receivablesDKK million 2018 2017

Trade receivables, gross 739 1,016

Loss allowance at January 1 -21 -31

Increase in loss allowance for the year -22 -5

Reversal of loss allowance, prior years 21 15

Loss allowance at December 31 -22 -21

Trade receivables at December 31 717 995

Of this, due after more than 1 year 4 8

Realized losses for the year 19 10

Receivables, gross due at December 31 have the following aging in %: 2018 2017

Not due 65 51

1-90 days 20 24

91-180 days 4 12

181+ days 11 13

Gross trade receivables DKK million

Expected loss rate

%

Loss allowance

DKK million

Not due 476 0 0

1-90 days 150 0 0

91-180 days 30 0 0

181-360 days 47 32 15

360+ days 36 19 7

Total 739 22

If IFRS 9 had been implemented as at december 31, 2017, the loss allowance would have amounted to dKK 15 million.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 16contract work in progressDKK million 2018 2017

Selling price of work performed at the balance sheet date 5,911 5,581

Payments received on account -6,216 -6,083

Contract work in progress at December 31 -305 -502

Contract work in progress recognized in assets 187 173

Contract work in progress recognized in liabilities -492 -675


Note 17Receivables from the parent companyDKK million 2018 2017

Deposit with the parent company 0 129

Unpaid share capital 241 241

Declared, unpaid dividend -241 0

Other receivables/payables 190 1

Receivables from the parent company at December 31 190 371

deposit with the parent company is part of a cash pooling arrangement.

Note 18other receivablesDKK million 2018 2017

Receivable regarding VAT and tax 76 116

Fair value of derivative financial instruments 0 23


Other receivables at December 31 121 215


Note 19Share capitalNumber of shares 2018 2017

Shares of a nominal value of DKK 376,000,000 376,000 376,000

the share capital consists of 376,000 shares with a nominal value of dKK 1,000 each. no shares carry any special right.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 20Reserves

DKK millionRevaluation

reserve

Foreign currency

translation reserve

Reserve for unpaid

share capital

Reserve for value

adjustment of hedging

instruments

Reserve for finan-

cial assets measured at

fair value Total

Reserves at January 1, 2018 198 20 241 6 177 642

Foreign currency translation adjustment 0 38 0 0 -1 37

Derivative financial instruments used for hedging of future cash flows 0 0 0 -3 0 -3

Realized derivative financial instruments transferred to financial income/expense 0 0 0 -6 0 -6

Fair value adjustment of financial assets 0 0 0 0 -39 -39

Other 0 -4 0 0 0 -4

Revaluation of land 30 0 0 0 0 30

Tax -7 0 0 1 1 -5

Total reserves at December 31, 2018 221 54 241 -2 138 652

DKK millionRevaluation

reserve

Foreign currency

translation reserve

Reserve for unpaid

share capital

Reserve for value

adjustment of hedging

instruments

Reserve for finan-

cial assets measured at

fair value Total

Reserves at January 1, 2017 181 171 241 -4 207 796

Foreign currency translation adjustment 0 -175 0 0 0 -175

Recycling currency translation adjustments from discontinuing operations 0 24 0 0 0 24

Derivative financial instruments used for hedging of future cash flows 0 0 0 12 0 12

Realized derivative financial instruments transferred to financial income/expense 0 0 0 1 0 1

Fair value adjustment of financial assets 0 0 0 0 -26 -26

Tax adjusted on revaluation of land and buildings 17 0 0 0 0 17

Tax 0 0 0 -3 -4 -7

Total reserves at December 31, 2017 198 20 241 6 177 642



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 21dividendProposed dividend constitutes dKK 0 million (2017: dKK 225 million) corresponding to dKK 0 (2017: dKK 598.4) per share.

Interim dividend of dKK 650 million for 2018 and dividend of dKK 225 million for 2017 have been paid during 2018 (2017: dKK 125 million and dKK 209 million) corresponding to dKK 2,327.13 (2016: dKK 888.30) per share.

Dividend policyHaldor topsoe Group is financing the operations of Haldor topsøe Holding A/S through dividend payments. the liquidity effect of the expected future dividend payments has been incorporated in the cash flow forecasts of Haldor topsoe Group.

Note 22Pension obligations and similar obligationsthe Group has entered into pension plans with a considerable number of its employees. Most of the plans are defined contribution plans and only a small part is defined benefit plans.

Defined contribution plansthe Group finances the plans by currently paying a premium to independent insurance companies that are responsible for the pension obligations. once the pension contributions to the defined contribution plans have been paid, the Group has no further pension obligations to current or terminated employees.

Defined benefit plansthe Group has made agreements with specific groups of employees regarding payment of certain benefits, including pension. these pensions mainly relate to certain employees in the Group's uS subsidiary where the plan partly consists of a basic pension and partly of an additional pension for selected members of management. the pension obligations are partly hedged through an independent fund. Actuarial valuation is performed annually. In addition, employees in India and Germany are covered by defined benefit plans.


Pension costs 4 6


Interest income on plan assets -9 -8

Total pension related to defined benefit recognized in staff expenses 6 8

Applied actuarial assumptions in % 2018 2017

Discount rate 2.00-7.63 3.28

Future pay increases 2.50-9.81 3.00

A change in the discount rate of -0.5% or +0.5%, respectively, would impact the defined benefit obligation by +5% or -4%, respec-tively. A change in the future pay increase of -0.5% or +0.5, respectively, would impact the defined benefit obligation by -1% or +1%, respectively.

the weighted average duration of the defined benefit obligation is 7.7-10.9 years (2017: 9.5 years).



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 22Pension obligations and similar obligations (continued)% 2018 2017

US 32 35

International 28 33

Global 3 4

Shares 63 72

US investment grade 16 7

High yield 11 9

Inflation protected 1 1

Other 1 1

Bonds 29 18

Real estate 3 3

Commodities 4 4

Other 1 3

Distribution of plan assets at December 31 100 100


Present value of pension obligations 294 288

Fair value of pension plan assets -251 -258

Net obligation at December 31 43 30

Present value of pension obligations at January 1 288 320


Pension costs 4 6


Gain/loss on curtailments 0 -12

Actuarial gains and losses, demographic assumption 6 -4

Actuarial gains and losses, financial assumption -33 25

Pension paid -37 -21

Present value of pension obligations at December 31 294 288

Fair value of pension plan assets at January 1 258 246


Interest on pension assets 9 8

Return on plan assets excl. interest on pension assets -22 33

Paid by the company 24 22

Pension paid -37 -21

Fair value of pension plan assets at December 31 251 258

Expected defined benefit pension payments by the Group in 2019 amount to dKK 34 million.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 23deferred taxDKK million 2018 2017

Deferred tax at January 1 522 514


Tax on equity items 7 -1

Tax for the year -149 -3

Tax previous years 0 15

Deferred tax at December 31 381 522

Intangible assets and property, plant and equipment 158 138

Inventories 12 15


Provisions -34 -27

Other -49 10



Note 24Provisions

DKK million

Warranty provision for engineering

projects and catalysts

Waste disposal Other Total

Provisions at January 1, 2018 205 1 49 255

Reversals during the year -2 -1 -3 -6

Provisions for the year 26 0 12 38

Provisions at December 31, 2018 229 0 58 287

Of this, due after more than 1 year 287

DKK million

Warranty provision for engineering

projects and catalysts

Waste disposal Other Total

Provisions at January 1, 2017 198 1 4 203

Reversals during the year -7 0 0 -7

Provisions for the year 14 0 45 59

Provisions at December 31, 2017 205 1 49 255

Of this, due after more than 1 year 255

Warranty provision can be impacted by unexpected quality issues on our catalyst or technology solutions, e.g. on new technologies.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 25non-current liabilitiesDKK million 2018 2017

Bonds

After 5 years 0 0

Between 1 and 5 years 499 499

More than 1 year 499 499

Less than 1 year 0 499

Bonds at December 31 499 998

Mortgage debt

After 5 years 15 18




Mortgage debt at December 31 30 33

Credit institutions

After 5 years 157 93




Credit institutions at December 31 859 685

Lease obligations





Lease obligations at December 31 129 130

Deferred income

After 5 years 0 0




Deferred income at December 31 14 1

The Group leases property under a non-cancellable finance lease agreement. The lease runs until 2036.At the end of the lease period, the Group is obligated to purchase the property at a price of DKK 74 million.

Interest bearing debt at January 1 1,846 1,981

Foreign currency translation adjustment -2 -9

Raising loans 299 0

Installments -626 -126

Interest bearing debt at December 31 1,517 1,846



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 26other payablesDKK million 2018 2017

Staff-related items 335 272

Fair value of derivative financial instruments 5 3

Tax-related items 4 4

Other payables 261 228

Other payables at December 31 605 507




Note 27Prepayments from customersDKK million 2018 2017

Prepayments related to sale of goods 418 229

Prepayments from customers at December 31 418 229

Note 28Assets provided as securityDKK million 2018 2017

Carrying amount of non-current assets (land and buildings) provided as security 23 203

Remaining balance of loans secured by non-current assets 30 33

Nominal value of the loans (real estate deeds and owners' mortgage deeds) 33 41

Remaining balance of loan secured by all assets of Haldor Topsoe Inc. 0 12

Assets are provided as security for mortgage debt, and for 2017 also for other long-term loans. In case of other debt to the secured creditor, the asset(s) provided as security may – until release thereof – serve as security for any present or future obligation that the Group may have towards such parties.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 29GuaranteesDKK million 2018 2017

Guarantees given by banks and credit insurance institutions on the Group's behalf for contract work, etc. 1,040 735

Guarantees issued at December 31 1,040 735



After 5 years 28 30

Guarantees issued at December 31 1,040 735

Note 30contractual obligationsDKK million 2018 2017




Contractual obligations regarding leases at December 31 749 732

Payments for the year recognized as operating lease expenses 102 97

Leases and rental agreements relate mainly to premises and equipment, etc. and extend in some cases to 2032.

the Group is obligated to invest an additional dKK 29 million in companies included under "other investments".

Note 31contingent liabilitiesthe Group's property in Frederikssund, denmark, has been found to be contaminated. Management assesses that the remediation costs will not be significant.

through participation in joint taxation scheme with Haldor topsøe Holding A/S, the Group is jointly and severally liable for taxes etc. payable in denmark.

Note 32Fee to auditors appointed at the general meetingPlease refer to the note in the consolidated financial statements for the parent company, Haldor topsøe Holding A/S.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 33Related parties

Control

Haldor Topsøe Holding A/S, Lyngby, Denmark – shareholder


Interest received from the parent company 2 2

Receivables from the parent company at December 31 190 371

DKK million Related parties Transactions 2018 2017

Companies under common control Rent 2 0

Deposit 2 2

Joint venture Outstanding balance 15 0

Remuneration to Executive committee and Board of directors, please refer to note 5.

Intercompany transactions have been eliminated in the consolidated financial statements.

Note 34derivative financial instruments

DKK million

Contract amount

2018Fair value

2018

Contract amount

2017Fair value

2017

Sale of KWD (exchange rate 21.631), matures in 2018 0 0 193 11

Forward exchange contracts at December 31 0 0 193 11

the Group uses forward exchange contracts to hedge against changes in exchange rates in volatile currencies for contract-relat-ed payments up to 12 months forward. the fair value of the contracts is recognized in the balance sheet through other compre-hensive income. the Group thus applies the rules on hedge accounting.

DKK million

Contract amount

2018Fair value

2018

Contract amount

2017Fair value

2017

EUR interest rate swap (4.62%), matures on December 31, 2021 24 -2 32 -3

Interest rate swaps at December 31 24 -2 32 -3

the Group uses interest rate swaps to hedge against changes in interest rate levels and thus reduce the interest rate risk. Interest rate swaps are used on floating rate loans. the fair value of the swaps is recognized in the balance sheet through other comprehensive income. the Group thus applies the rules on hedge accounting.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 34derivative financial instruments (continued)

DKK million

Contract amount

2018Fair value

2018

Contract amount

2017Fair value

2017

Aggregate amount of commodity swaps within metals, matures in 2020 5 0 0 0

Aggregate amount of commodity swaps within metals, matures in 2019 23 -3 3 0


Commodity swaps at December 31 28 -3 48 12

the Group uses commodity swaps to hedge against price fluctuations in raw materials, primarily base metals (nickel, copper, and zinc) of specific production contracts. Hedging duration depends on the specific underlying contract, but it is typically less than 24 months. the fair value of the swaps is recognized directly in the income statement.

the cost of raw materials is a significant cost component in our products, and costs can fluctuate considerably. the Group seeks to minimize the risk related to commodity price fluctuations through contractual escalation clauses. In addition, the Group uses financial hedging when quoting fixed contract prices.

Note 35Financial assets and liabilitiesDKK million 2018 2017



Other financial receivables 151 269

Cash 761 862

Financial assets at December 31 1,973 2,442

Bonds, mortgage debt, debt to credit institutions 1,388 1,716

Finance obligations 129 130


Other financial liabilities 605 507

Financial liabilities at December 31 2,517 2,735

Financial assets measured at fair value through other comprehensive income 344 316

Financial assets measured at amortized cost 1,629 2,103

Derivative financial instruments measured at fair value 0 23

Classification of financial assets at December 31 1,973 2,442

Financial liabilities measured at amortized cost 2,512 2,732

Derivative financial instruments measured at fair value 5 3

Classification of financial liabilities at December 31 2,517 2,735



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 35Financial assets and liabilities (continued)DKK million 2018 2017

Bonds, mortgage debt and debt to credit institutions

Payments:


Between 1 and 5 years 1,094 1,032


Bonds, mortgage debt and debt to credit institutions at nominal value 1,458 1,789

Future finance charges -70 -73

Bonds, mortgage debt and debt to credit institutions at present value 1,388 1,716

Lease obligations

Minimum lease payments:




Lease obligations at nominal value 226 232

Future finance charges -97 -102

Lease obligations at present value 129 130

Trade payables:


Derivative financial instruments:

After 5 years 0 0



Other financial liabilities:




topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 35Financial assets and liabilities (continued)DKK million Level 1 Level 2 Level 3

Other securities and investments 21 0 323


Derivative financial instruments 0 5 0

Distribution of liabilities stated at fair value at December 31, 2018 0 5 0

Level 1: Listed prices in an active market for the same type of instrument.Level 2: Listed prices in an active market for similar assets or liabilities or other valuation methods according to which all material

input is based on observable market data.Level 3: Valuation methods according to which material input is not based on observable market data.

Please refer to note 13 for information on input to valuation of investments in other enterprises stated at fair value in level 3.

Fair value of contingent considerationsIn the event that the operations of the divested Automotive Business achieve certain performance criteria during the period from January 1, 2018 to december 31, 2020, as specified in an ’Volume earn-out’ clause in the sales agreement, an additional cash consideration will be receivable from the buyer. At year-end, the fair value of the ’Volume earn-out’ was determined to be dKK 0 million, as Management assesses that the performance criteria are unlikely to be met.

there have been no transfers between levels 1, 2 and 3 during the year.


Fair value of level 3 assets at January 1 271 313

Addition 89 0

Write-down recognized in other comprehensive income -37 -42

Fair value of level 3 assets at December 31 323 271

Financial risksCurrenciesAs topsoe operates globally, the income statement, balance sheet, and cash flows are subject to the risk of currency fluctuations, mainly in relation to topsoe’s flows of EuR and uSd.

Part of this risk is mitigated through natural hedges arising from activities where topsoe has both income and expenses in the same currency. However, the risk is not fully covered by natural hedges, and consequently topsoe hedges certain future cash flows. A 5% increase in the uSd/dKK exchange rate is assessed to have a positive EBIt effect of dKK 5-10 million.

Interest rates Long-term debt consists of loans and bonds with fixed and floating interest rates. topsoe’s policy is to maintain a loan portfolio with 35-50% floating rate and 50-65% fixed rate. For the floating rate portion of topsoe’s interest-bearing debt, an increase in the interest rate level of 1 percentage point will increase interest expenses by dKK 4 million.

Credittopsoe's credit risk is primarily related to trade receivables from state-owned as well as privately owned corporations. Where feasible, we seek to mitigate credit risk by applying instruments such as letters of credit and bank guarantees as well as selective structuring of payment terms, etc. Loss allowances are assessed on an ongoing basis.

Liquidity topsoe must maintain sufficient liquidity to fund daily operations, debt service, and expansion. topsoe’s access to liquidity con-sists of cash and cash equivalents, including access to committed revolving credit facilities. the target is to maintain a minimum of dKK 500 million in unused committed revolving credit facilities at any time.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 36Adjustments for non-cash itemsDKK million 2018 2017

Financial income -71 -79

Financial expenses 77 126

Result of investment in joint venture 10 30

Amortization, depreciation and impairment losses, including gains and losses from sale of assets 256 336

Tax 185 133

Other adjustments 16 -118

Total adjustments for non-cash items 473 428

Note 37change in working capitalDKK million 2018 2017

Increase (-) / decrease in inventories -79 283

Increase (-) / decrease in receivables 297 -203

Increase / decrease (-) in contract billing -220 -75

Increase / decrease (-) in suppliers, etc. 412 -105

Total change in working capital 410 -100

Note 38Subsequent eventsno events materially affecting the company's financial position at december 31, 2018 have occured after the balance sheet date.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 39List of group companies

Name Registered officeVoting and

ownership share

Haldor Topsøe International A/S Lyngby, Denmark 100%

Subcontinent Ammonia Investment Company ApS Lyngby, Denmark 100%

Haldor Topsøe Project Investment A/S Lyngby, Denmark 100%

HT Ramagundam A/S Lyngby, Denmark 100%

Haldor Topsøe Sustainables A/S Lyngby, Denmark 100%

Topsoe Fuel Cell A/S under frivillig likvidation Lyngby, Denmark 100%

Haldor Topsoe Germany GmbH Essen, Germany 100%

OOO Haldor Topsøe Moscow, Russia 100%

Haldor Topsoe, Inc. Houston, USA 100%

Haldor Topsoe LFG Solutions Inc. Houston, USA 100%

Haldor Topsoe Project Development Inc. Houston, USA 100%

Pacific Coast Fertilizer LLC Seattle, USA 77%

Haldor Topsoe Canada Limited Vancouver, Canada 100%

Haldor Topsoe De Mexico, S. A. de C. V. Mexico City, Mexico 100%

Haldor Topsoe do Brasil Tecnologia e Servicos em Catalisadores Eireli Rio de Janeiro, Brazil 100%

Haldor Topsoe America Latina S.A. Buenos Aires, Argentina 100%

Haldor Topsøe (Beijing) Co., Ltd Beijing, China 100%

Haldor Topsøe Science & Technology (Dalian) Co., Ltd. Dalian, China 100%

Jiangsu JITRI-Topsoe Joint R&D Center Co, Ltd. Suzhou, China 60%

Haldor Topsoe India Pvt. Ltd. New Delhi, India 100%

Haldor Topsoe Sdn. Bhd. Kuala Lumpur, Malaysia 100%



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Note 40Business combinationson August 3, 2018, the Group acquired the remaining 50% of the shares in the joint venture Ferrostaal topsoe Project GmbH, whose activity is project development. the acquisition increases the Group's project planning and development competencies.

Ferrostaal topsoe Project GmbH has changed name to Haldor topsoe Germany GmbH. the company owns two minor subsidiaries, Haldor topsoe Project development Inc. and Pacific coast Fertilizer LLc.

DKK million

Fair value at acquisition

date

Deferred tax receivables 33

Other receivables 1

Cash 34

Assets 68

Pension obligation -33

Other payables -33

Liabilities -66

Net identifiable assets acquired 2

Negative goodwill -2

Net assets acquired 0

Cash 0

Fair value of previously owned shares in the company 0

Total consideration 0

Acquired cash 34

Cash consideration -34

the Group's previous investment in the company has been adjusted to reflect the fair value of the shares, which has led to a fair value adjustment of dKK -2 million, which is included in "Result of investments in joint venture".

negative goodwill amounting to dKK 2 million is included in "Result of investments in joint venture". the negative goodwill has arisen from the workforce.

the acquired business contributed revenue of dKK 1 million and net profit of dKK 15 million to the Group for the period from August 3 to december 31, 2018. If the acquisition had occured on January 1, 2018, consolidated pro-forma revenue and net profit would have been dKK 5,617 million and dKK 481 million, respectively.




topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 41discontinuing operationson June 20, 2017, topsoe announced that it had sold its emissions control business areas. the divestment involved a loss of dKK 362 million (mainly related to revaluation) and a loss of dKK 60 million of the discontinuing operations for eleven months of 2017. the total loss of the divestment and the discontinuing operations for 2017 of dKK 422 million was recognized in the financial statements for 2017. the divestment was finalized on november 30, 2017. the divestment comprised the subsidiaries Haldor topsøe catalyst (tianjin) co., Ltd., Haldor topsøe Automotive catalyst trading (tianjin) co., Ltd. and Haldor topsoe catalisadores e technologias do Brasil Ltda. as well as business assets and liabilities in denmark, the uS, and china.

2018 has been impacted by the finalization of the divestment of the emissions control business areas. this resulted in a loss after tax on discontinuing operations of dKK 1 million in 2018. during 2018, loss on sale of discontinuing operations before tax amounted to dKK 18 million (mainly related to adjustment of net assets sold). Income tax on loss on sale of discontinuing operations was a gain of dKK 3 million. consequently, the net loss on the sale of discontinuing operations amounted to dKK 15 million in 2018. Loss from discontinuing operations amounted to dKK 16 million.

the financial performance information and cash flow presented are for the year ended december 31, 2018, and the eleven months ended november 30, 2017 (2017 column).


Revenue 50 652

Expenses -51 -705

Loss before tax -1 -53

Tax 0 -7

Loss after tax on discontinuing operations -1 -60

Loss on sale of discontinuing operations -15 -362


Foreign currency translation adjustment from discontinuing operations 0 24

Other comprehensive income arising from discontinuing operations 0 24

Net cash inflow from operating activities -284

Net cash inflow (outflow) from investing activities (2017 includes an inflow of DKK 922 million from the divestment) 913

Net cash (outflow) from financing activities -126

Net increase in cash generated by the discontinuing operations 503

Cash 956

Fair value of contingent considerations 0

Total received or receivable consideration 956

Carrying amount of net assets sold -16 -1,195

Transaction costs -2 -64

Loss on sale before income tax and reclassification of foreign currency translation reserve -18 -303

Reclassification of foreign currency translation reserve - -24

Income tax expense on loss 3 -35

Loss on sale of discontinuing operations -15 -362



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 41discontinuing operations (continued)In the event that the operations of the divested Automotive Business achieve certain performance criteria during the period from January 1, 2018, to december 31, 2020, as specified in an ’Volume earn-out’ clause in the sales agreement, an additional cash consideration will be receivable from the buyer. At year-end, the fair value of the ’Volume earn-out’ was determined to be dKK 0 million, as Management assesses that the performance criteria are unlikely to be met.

DKK million 2017

Intangible assets 18

Property, plant and equipment 702

Financial assets 18

Inventories 313

Receivables 236

Non-current liabilities -4

Current liabilities -88

Total carrying amount of assets and liabilities in discontinuing operations at November 30, 2017 1,195



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Financial statements of Haldor Topsoe A/S

FINANCIAL STATEMENTS OF HALDOR TOPSOE A/S ANNUAL REPORT 2018 HALDOR TOPSOE A/S 79


topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Financial statements for Haldor Topsoe

Income statement of Haldor Topsoe A/S


Revenue 2 5,007 4,372

Change in inventories of finished goods and intermediate products 35 -35

Other operating income 67 11

Purchased equipment for contract work -592 -561

Raw materials and consumables used -1,464 -1,173

Other external expenses -986 -875

Gross profit 2,067 1,739

Staff expenses 3 -1,257 -1,155

Depreciation, amortization and impairment losses -220 -224

EBIT 590 360

Result of investments in group enterprises and joint venture 4 66 129

Financial income 5 47 60

Financial expenses 6 -79 -107

Profit before tax 624 442

Tax -157 -69

Profit from continuing operations 467 373

Loss from discontinuing operations 27 -16 -422

Net profit 7 451 -49



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Balance sheet of Haldor Topsoe A/S

AssetsDecember 31 December 31


Rights 17 19

Patents 41 45

Software 14 20

Intangible assets under construction 4 0

Intangible assets 8 76 84




Property, plant and equipment under construction 160 119

Property, plant and equipment 9 1,494 1,538

Investments in group enterprises 1,240 1,312

Investments in joint venture 0 0

Receivables from group enterprises 46 2

Finance lease receivables 8 0



Investments 10 1,381 1,390

Non-current assets 2,951 3,012

Inventories 11 804 777



Receivables from group enterprises 13 259 543

Finance lease receivables 10 1 0


Prepayments 14 14

Receivables 1,228 1,653

Cash 435 613

Current assets 2,467 3,043

Assets 5,418 6,055



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Balance sheet of Haldor Topsoe A/S

Equity and liabilitiesDecember 31 December 31


Share capital 376 376

Revaluation reserve 112 112

Net revaluation reserve according to the equity method -13 56

Reserve for unpaid share capital 241 241

Reserve for development costs 33 29

Retained earnings 537 625

Proposed dividend 0 225

Equity 1,286 1,664

Deferred tax 14 369 479

Provisions 15 277 242

Bonds 16 499 499





Non-current liabilities 2,000 1,957

Bonds 16 0 499




Deferred income 2 1

Prepayments from customers 17 356 212



Payables to group enterprises 106 116

Corporate income tax 236 74

Other payables 472 426

Current liabilities 2,132 2,434

Liabilities 4,132 4,391

Equity and liabilities 5,418 6,055



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Statement of changes in equity of Haldor Topsoe A/S

DKK millionShare

capitalRevaluation

reserve

Net revaluation

reserve according to

the equity method

Reserve for unpaid

share capital

Reserve for develop-

ment costsRetained earnings

Dividend proposed Total

Equity at January 1, 2018 376 112 56 241 29 625 225 1,664

Net profit 0 0 -141 0 0 592 0 451

Adjustments relating to separate foreign legal entities 0 0 85 0 0 0 0 85

Recycling currency translation adjustments from discontinuing operations 0 0 0 0 0 0 0 0

Fair value adjustment of derivative financial instruments 0 0 0 0 0 -8 0 -8

Capitalized development projects 0 0 0 0 4 -4 0 0

Other adjustments 0 0 0 0 0 -31 0 -31

Net profit and income and expenses recognized under equity 0 0 -56 0 4 549 0 497

Dividend paid 0 0 0 0 0 0 -225 -225

Interim dividend paid 0 0 0 0 0 -650 0 -650

Dividend proposed 0 0 0 0 0 0 0 0

Transactions with owners 0 0 0 0 0 -650 -225 -875

Equity at December 31, 2018 376 112 0 241 33 524 0 1,286



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Parent notes

Notes to the financial statements of Haldor Topsoe A/S

List of notes

Note 1 Accounting policies 85

Note 2 Revenue 85

Note 3 Staff expenses 85

Note 4 Result of investments in group enterprises and joint venture 86

Note 5 Financial income 86

Note 6 Financial expenses 86

Note 7 Proposed distribution of profit 86

Note 8 Intangible assets 87

Note 9 Property, plant and equipment 87

Note 10 Investments 88

Note 11 Inventories 90

Note 12 Contract work in progress 90

Note 13 Receivables from group enterprises 90

Note 14 Deferred tax 91

Note 15 Provisions 91

Note 16 Non-current liabilities 92

Note 17 Prepayments from customers 92

Note 18 Assets provided as security 93

Note 19 Guarantees 93

Note 20 Contractual obligations 93

Note 21 Contingent liabilities 93

Note 22 Fee to auditors appointed at the general meeting 93

Note 23 Related parties 94

Note 24 Derivative financial instuments 94

Note 25 Subsequent events 94

Note 26 Consolidated financial statements 95

Note 27 Discontinuing operations 95



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 1Accounting policies

Basis of preparation

the financial statements of Haldor topsoe A/S have been prepared in accordance with the provisions of the danish Financial Statements Act ap-plying to large enterprises of report-ing class c. the accounting policies are unchanged from last year. the applied accounting policies are similar to those of the Group except for the following matters:

Other securities and investments other investments are measured at market value or estimated fair value. unrealized value adjustments are included in the income statement

in “Financial income” or “Financial expenses”.

Investments in group enterprisesInvestments in group enterprises are recognized and measured under the equity method.

Group enterprises which have nega-tive equity are measured at dKK 0, and receivables from these group enterprises are written down by the parent company’s share of the negative equity if it is estimated to be irrecoverable.

If the negative equity exceeds receiv-ables, the remaining amount is recog-nized under provisions to the extent the parent company has a legal or constructive obligation to cover the group enterprise’s deficit.

the item “Result of investments in group enterprises and joint venture” in the income statement includes the proportionate share of the result after tax.

ReservesReserve for development costs comprises development costs after depreciation and tax for self-con-structed development projects.

Cash flow statementno separate cash flow statement has been prepared for the parent compa-ny, as the parent company’s cash flow statement is included in the consoli-dated cash flow statement.

Note 2Revenuethe company's activities are in the business segment of providing catalytic processes for integrated solutions to industrial plants. the provision of these integrated solutions comprises fundamental and applied research, reaction engineering, process engineering, mechanical design and production and supply of catalysts.

the company has not disclosed the revenue split by segments for competitive reasons, as disclosure of this information is as-sessed to be potentially harmful to the company.

Note 3Staff expensesDKK million 2018 2017

Wages and salaries 1,094 1,000

Pensions 115 114

Other social security contributions 61 58

Total 1,270 1,172

Capitalization of work performed on property, plant and equipment -13 -17

Total staff expenses 1,257 1,155

Executive Management salary and pension 19 16

Fee to Board of Directors 7 7

Total remuneration to Executive Management and Board of Directors 26 23

Average number of employees 1,609 1,737



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 4Result of investments in group enterprises and joint ventureDKK million 2018 2017

Share of result of group enterprises, net 87 152

Change in intercompany profit -11 7

Share of result of joint venture, net -10 -30

Total income from investments in group enterprises and joint venture 66 129

Note 5Financial incomeDKK million 2018 2017

Income from other investments 0 1

Interest received from group enterprises 2 2

Interest income 3 1


Value adjustments of other investments 0 17

Other financial income 1 0

Total financial income 47 60

Note 6Financial expensesDKK million 2018 2017



Value adjustments of other investments 3 1

Total financial expenses 79 107

Note 7Proposed distribution of profitDKK million 2018 2017

Proposed dividend 0 225

Interim dividend paid during the year 650 125

Net revaluation reserve according to the equity method -154 -186

Retained earnings -45 -213

Total proposed distribution of profit 451 -49



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 8Intangible assets



Cost at January 1, 2018 25 116 163 0


Disposals during the year 0 -44 -1 0

Transfers during the year 1 -1 4 1

Cost at December 31, 2018 26 87 167 4


Amortization during the year 3 7 10 0

Reversal of amortization and impairment losses on assets sold 0 -32 0 0



Note 9Property, plant and equipment


Plant and machinery

Other fixtures and

equipment

Property, plant and

equipment under

construction

Cost at January 1, 2018 787 1,851 857 119


Disposals during the year -1 -1 -1 0


Cost at December 31, 2018 790 1,919 899 160





Reversal of depreciation on assets sold and scrapped -1 -1 0 0




Of this finance lease assets 122 0 0 0

Borrowing costs capitalized in 2018 amounted to dKK 2 million (2017: dKK 0 million).



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 10Investments

DKK million

Investments in group

enterprises

Investments in joint

venture

Receivables from group enterprises

Cost at January 1, 2018 959 39 2


Disposals during the year -8 0 0

Transfers during the year 39 -39 0

Cost at December 31, 2018 1,005 0 46

Value adjustment at January 1, 2018 353 -39 0

Foreign currency adjustments 40 0 0

Dividend -146 0 0

Net profit for the year 5 -10 0

Disposals during the year -3 0 0

Other adjustments 22 28 0

Investments with negative equity transferred to receivables 0 -15 0

Transfers during the year -36 36 0

Value adjustment at December 31, 2018 235 0 0

Carrying amount at December 31, 2018 1,240 0 46

DKK millionFinance lease

receivables

Other securities

and investments

Other receivables

Cost at January 1, 2018 0 21 47


Disposals during the year 0 -2 -35

Transfers during the year 0 0 0

Cost at December 31, 2018 9 58 18

Value adjustment at January 1, 2018 0 23 -15

Value adjustment during the year 0 -2 -4

Disposals during the year 0 -6 0

Investments with negative equity transferred to receivables 0 0 15

Transfers during the year 0 0 0

Value adjustment at December 31, 2018 0 15 -4

Carrying amount at December 31, 2018 9 73 14

Of this less than 1 year 1



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 10Investments (continued)Investments in joint venture are specified as follows:

Ferrostaal Topsoe Projects GmbHthe joint venture Ferrostaal topsoe Projects GmbH was fully acquired during 2018 and is now 100% owned by Haldor topsoe A/S and fully consolidated in the topsoe Group. Ferrostaal topsoe Projects GmbH has changed name to Haldor topsoe Germany GmbH.

other securities and investments are specified as follows:

Chambal Fertilizer and Chemical Ltd., IndiaHaldor topsoe A/S has an investment in chambal Fertilizer and chemicals Ltd., corresponding to 0.34% of the share capital. dur-ing 2018, Haldor topsoe A/S has sold 30% of the investment. the remaining investment has been sold in the beginning of 2019. the investment is measured at fair value based on listed market value.

GTLA Holding LP, USHaldor topsoe A/S has invested in GtLA Holding LP, corresponding to 3% of the share capital.the purpose of the company is to develop a project regarding construction of a gas-to-liquid plant. the investment is measured at estimated fair value.

Investments in group enterprises are specified as follows:

Name Registered officeVoting and

ownership share

Haldor Topsøe International A/S Lyngby, Denmark 100%

Subcontinent Ammonia Investment Company ApS Lyngby, Denmark 100%

Haldor Topsøe Project Investment A/S Lyngby, Denmark 100%

HT Ramagundam A/S Lyngby, Denmark 100%

Haldor Topsøe Sustainables A/S Lyngby, Denmark 100%

Topsoe Fuel Cell A/S under frivillig likvidation Lyngby, Denmark 100%

Haldor Topsoe Germany GmbH Essen, Germany 100%

OOO Haldor Topsøe Moscow, Russia 100%

Haldor Topsoe, Inc. Houston, USA 100%

Haldor Topsoe LFG Solutions Inc. Houston, USA 100%

Haldor Topsoe Project Development Inc. Houston, USA 100%

Pacific Coast Fertilizer LLC Seattle, USA 77%

Haldor Topsoe Canada Limited Vancouver, Canada 100%

Haldor Topsoe De Mexico, S. A. de C. V. Mexico City, Mexico 100%

Haldor Topsoe do Brasil Tecnologia e Servicos em Catalisadores Eireli Rio de Janeiro, Brazil 100%

Haldor Topsoe America Latina S.A. Buenos Aires, Argentina 100%

Haldor Topsøe (Beijing) Co., Ltd Beijing, China 100%

Haldor Topsøe Science & Technology (Dalian) Co., Ltd. Dalian, China 100%

Jiangsu JITRI-Topsoe Joint R&D Center Co.. Ltd. Suzhou, China 60%

Haldor Topsoe India Pvt. Ltd. New Delhi, India 100%

Haldor Topsoe Sdn. Bhd. Kuala Lumpur, Malaysia 100%



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 11InventoriesDKK million 2018 2017

Raw materials and consumables 153 160


Finished goods 539 523

Inventories at December 31 804 777

Note 12contract work in progressDKK million 2018 2017

Selling price of work performed at the balance sheet date 5,686 5,494

Payments received on account -5,962 -5,993


Contract work in progress recognized in assets 187 170

Contract work in progress recognized in liabilities -463 -669


Note 13Receivables from group enterprisesDKK million 2018 2017

Deposit with the holding company 0 129

Unpaid share capital 241 241

Declared, unpaid dividend -241 0


Receivables from group enterprises at December 31 259 543

deposit with the holding company is part of a cash pooling arrangement.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 14deferred taxDKK million 2018 2017

Deferred tax at January 1, 2018 479 477

Tax for the year -110 2


Intangible assets and property, plant and equipment 90 79

Inventories 18 22


Provisions -27 -25

Other -6 17


Deferred tax 369 479

Deferred tax recognized in the balance sheet at December 31 369 479

deferred tax has been provided at mainly 22% corresponding to the current danish tax rate.

Note 15ProvisionsDKK million 2018 2017

Warranty provision for technology projects and catalysts 219 196

Other provisions 58 46

Provisions at December 31 277 242




topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 16non-current liabilitiesDKK million 2018 2017

Bonds

After 5 years 0 0




Bonds at December 31 499 998

Amortization cost included under long-term liabilities, bonds 1 2

Mortgage debt

After 5 years 15 18




Mortgage debt at December 31 30 33

Credit institutions





Credit institutions at December 31 859 672

Lease obligation





Lease obligation at December 31 129 130

Other payables





other payables consist of derivative financial instruments.

Note 17Prepayments from customersDKK million 2018 2017

Prepayments related to sale of goods 356 212

Prepayments from customers at December 31 356 212



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 18Assets provided as securityDKK million 2018 2017

Carrying amount of non-current assets (land and buildings) provided as security 23 24

Remaining balance of loans secured by non-current assets 30 33

Nominal value of the loans (real estate deeds and owners' mortgage deeds) 33 41

Assets are provided as security for mortgage debt and for 2017 also other long-term loans. In case of other debt to the secured creditor, the asset(s) provided as security may – until release thereof – serve as security for any present or future obligation that the company may have towards such parties.

Note 19GuaranteesDKK million 2018 2017

Guarantees given by banks and credit insurance institutions on the Company's behalf for contract work, etc. 974 735

Parent company guarantees issued by the Company for certain obligations in subsidiaries 66 0

Note 20contractual obligationsDKK million 2018 2017




Contractual obligations at December 31 621 641

Leases and rental agreements relate to premises and equipment, etc. and extend in some cases to 2032.

the company has an obligation of dKK 8 million related to man-hours towards a Group company.

the company is obligated to invest an additional dKK 7 million in companies included under "other investments".

Note 21contingent liabilitiesthe company's property in Frederikssund, denmark, has been found to be contaminated. Management assesses that the remediation costs will not be significant.

through participation in joint taxation scheme with Haldor topsøe Holding A/S, the company is jointly and severally liable for taxes etc. payable in denmark.

Note 22Fee to auditors appointed at the general meetingPlease refer to the note in the consolidated financial statements for the parent company, Haldor topsoe Holding A/S.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 23Related partiesControl

Haldor Topsøe Holding A/S, Lyngby, Denmark – shareholder

no transactions have been carried out with the Board of directors, Executive committee, key management staff, shareholders, group enterprises or other related parties which have not been under normal market conditions.

Note 24derivative financial instuments

DKK million

Contract amount

2018Fair value

2018

Contract amount

2017Fair value

2017

Sale of KWD, matures in 2018 0 0 193 11

Forward exchange contracts at December 31 0 0 193 11

the company uses forward exchange contracts to hedge against changes in exchange rates in volatile currencies, especially uSd, for contract related payments up to 12 months forward.

DKK million

Contract amount

2018Fair value

2018

Contract amount

2017Fair value

2017

EUR interest rate swap, matures on December 31, 2021 24 -2 32 -3

Interest rate swaps at December 31 24 -2 32 -3

the company uses interest rate swaps to hedge against changes in interest rate levels and thus reduce the interest rate risk. Interest rate swaps are used on floating rate loans.

DKK million

Contract amount

2018Fair value

2018

Contract amount

2017Fair value

2017


Aggregate amount of commodity swaps within metals, matures in 2019 23 -3 3 0


Commodity swaps at December 31 28 -3 48 12

the company uses commodity swaps to hedge against price fluctuations in raw materials, primarily base metals of specific production contracts. Hedging duration depends on the specific underlying contract, but it is typically less than 24 months.

the cost of raw materials is a significant cost component in our products, and costs can fluctuate considerably. the company seeks to minimize the risk related to commodity price fluctuations through contractual escalation clauses. In addition, the company uses financial hedging when quoting fixed contract prices.

Note 25Subsequent eventsno events materially affecting the company's financial position at december 31, 2018 have occured after the balance sheet date.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 26consolidated financial statementsHaldor topsøe Holding A/S prepares consolidated financial statements, which include the company and its group enterprises.

Note 27discontinuing operationson June 20, 2017, topsoe announced that it had sold its emissions control business areas. the divestment involved a loss of dKK 421 million (mainly related to revaluation) and a loss of dKK 1 million of the discontinuing operations for eleven months of 2017. the total loss of the divestment and the discontinuing operations for 2017 of dKK 422 million was recognized in the financial statements for 2017. the divestment was finalized on november 30, 2017. the divestment comprised the subsidiaries Haldor topsøe catalyst (tianjin) co., Ltd., Haldor topsøe Automotive catalyst trading (tianjin) co., Ltd. and Haldor topsoe catalisadores e technologias do Brasil Ltda. as well as business assets and liabilities in denmark, the uS, and china.

2018 has been impacted by the finalization of the divestment of the emissions control business areas. this resulted in a loss after tax on discontinuing operations of dKK 69 million in 2018. during 2018, the profit on the sale before income tax amounted to dKK 71 million (mainly related to adjustment of net assets sold). Income tax on profit on sale was a loss of dKK 18 million. consequent-ly, the net profit on the sale of discontinuing operations amounted to dKK 53 million in 2018.

Loss from discontinuing operations amounted to dKK 16 million.

the financial performance information presented is for the year ended december 31, 2018, and the eleven months ended novem-ber 30, 2017 (2017 column).


Revenue 15 391

Expenses -84 -403

Loss before tax -69 -12

Tax 0 11

Loss after tax of discontinuing operations -69 -1

Profit/loss on sale of discontinuing operations 53 -421


Cash 0 697

Fair value of contingent considerations 0 0

Total received or receivable consideration 0 697

Carrying amount of net assets sold 73 -1,037

Transaction costs -2 -53

Profit/loss on sale before income tax 71 -393

Reclassification of foreign currency translation reserve 0 -24

Income tax expense on result -18 -4

Profit/loss on sale of discontinuing operations 53 -421

In the event that the operations of the divested Automotive Business achieve certain performance criteria during the period from January 1, 2018 to december 31, 2020, as specified in an ’Volume earn-out’ clause in the sales agreement, an additional cash consideration will be receivable from the buyer. At year-end, the fair value of the ’Volume earn-out’ was determined to be dKK 0 million, as Management assesses that the performance criteria are unlikely to be met.



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


Note 27discontinuing operations (continued)DKK million 2017

Total carrying amount of assets and liabilities in discontinuing operations

Intangible assets 8

Property, plant and equipment 111

Financial assets 714

Inventories 104

Receivables 129

Non-current liabilities 0

Current liabilities -29

Total carrying amount of assets and liabilities in discontinuing operations at November 30, 2017 1,037



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport

Statement by the Executive Committee and Board of Directors on the Annual Report

the Executive committee and Board of directors have today considered and approved the Annual Report 2018 of Haldor topsoe A/S.

the consolidated financial state-ments have been prepared in ac-cordance with International Financial Reporting Standards as adopted by the Eu (IFRS), and the financial state-ments of the parent company have been prepared in accordance with the danish Financial Statements Act.

Lyngby, March 26, 2019

Executive Committee

Bjerne S. Clausen President and CEO

Amy Hebert Deputy CEO and Executive Vice President

Peter Rønnest Andersen Executive Vice President and CFO

In our opinion, the parent company financial statements and the con-solidated financial statements give a true and fair view of the financial position at december 31, 2018 of the Group and the parent company and of the results of the Group and parent company operations and of the Group’s cash flows for 2018 in accordance with the applied account-ing policies.

Board of Directors

Jeppe Christiansen Chairman

Jørgen Huno Rasmussen Vice Chairman

Jakob Haldor Topsøe Vice Chairman

Anders Heine Jensen Member

Jens Kehlet Nørskov Member

Christina Teng Topsøe Member

In our opinion, the Management’s re-view includes a true and fair account of the development in the opera-tions and financial circumstances, of the results for the year and of the financial position of the Group and the parent company as well as a descrip-tion of the most significant risks and elements of uncertainty facing the Group and the parent company.

We recommend that the Annual Report be adopted at the Annual General Meeting.

Anders Broe Bendtsen Employee representative

Christina Borch Employee representative

Jette Søvang Christensen Employee representative

Lis Ibsen Employee representative

97StAtEMEntS ANNUAL REPORT 2018 HALDOR TOPSOE A/S


topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


topsoe In Brief


ourLeadership

AuditorsReport

FinancialStatements

Statement

to the Shareholders of Haldor topsoe A/S

OpinionIn our opinion, the consolidated Financial Statements give a true and fair view of the Group’s financial position at december 31, 2018 and of the results of the Group’s operations and cash flows for the financial year January 1 to december 31, 2018 in accordance with International Finan-cial Reporting Standards as adopted by the Eu and further requirements in the danish Financial Statements Act.

Moreover, in our opinion, the Parent company Financial Statements give a true and fair view of the Parent com-pany’s financial position at december 31, 2018 and of the results of the Parent company’s operations for the financial year January 1 to december 31, 2018 in accordance with the dan-ish Financial Statements Act.

We have audited the consolidated Financial Statements and the Parent company Financial Statements of Hal-dor topsoe A/S for the financial year January 1 - december 31, 2018, which comprise income statement, balance sheet, statement of changes in eq-uity and notes, including a summary of significant accounting policies, for both the Group and the Parent company, as well as statement of comprehensive income and cash flow statement for the Group (“financial statements”).

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in denmark. our responsibilities under those standards and requirements are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ code of

Ethics for Professional Accountants (IESBA code) and the additional requirements applicable in denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Statement on Management’s reviewManagement is responsible for Management’s review.

our opinion on the financial state-ments does not cover Management’s review, and we do not express any form of assurance conclusion there-on.

In connection with our audit of the financial statements, our responsi-bility is to read Management’s review and, in doing so, consider whether Management’s review is materially inconsistent with the financial state-ments or our knowledge obtained during the audit, or otherwise appears to be materially misstated.

Moreover, it is our responsibility to consider whether Management’s review provides the information required under the danish Financial Statements Act.

Based on the work we have per-formed, in our view, Management’s re-view is in accordance with the consol-idated Financial Statements and the Parent company Financial Statements and has been prepared in accordance with the requirements of the danish Financial Statements Act. We did not identify any material misstatement in Management’s review.

Management’s responsibilities for the Financial StatementsManagement is responsible for the preparation of consolidated Financial Statements that give a true and fair view in accordance with Interna-tional Financial Reporting Standards as adopted by the Eu and further

requirements in the danish Financial Statements Act and for the prepa-ration of Parent company Financial Statements that give a true and fair view in accordance with the danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstate-ment, whether due to fraud or error.

In preparing the financial statements, Management is responsible for assessing the Group’s and the Parent company’s ability to continue as a going concern, disclosing, as applica-ble, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Group or the Parent company or to cease operations, or has no realistic alterna-tive but to do so.

Auditor’s responsibilities for the audit of the Financial Statementsour objectives are to obtain reason-able assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conduct-ed in accordance with ISAs and the additional requirements applicable in denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit conducted in ac-cordance with ISAs and the additional requirements applicable in denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Independent Auditor's Report



topsoe In Brief


ourLeadership

AuditorsReport

FinancialStatements

Auditors report

> Identify and assess the risks of ma-terial misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. the risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collu-sion, forgery, intentional omissions, misrepresentations, or the override of internal control.

> obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circum-stances, but not for the purpose of expressing an opinion on the ef-fectiveness of the Group’s and the Parent company’s internal control.

> Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.

> conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the financial statements and, based on the audit evidence obtained, whether a material uncer-tainty exists related to events or conditions that may cast significant doubt on the Group’s and the Par-ent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial state-ments or, if such disclosures are inadequate, to modify our opinion. our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. Howev-er, future events or conditions may cause the Group and the Parent company to cease to continue as a going concern.

> Evaluate the overall presentation, structure and contents of the financial statements, including the disclosures, and whether the

financial statements represent the underlying transactions and events in a manner that gives a true and fair view.

> obtain sufficient appropriate audit evidence regarding the financial information of the entities or busi-ness activities within the Group to express an opinion on the consol-idated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant au-dit findings, including any significant deficiencies in internal control that we identify during our audit.

Copenhagen, March 26, 2019

PricewaterhouseCoopersStatsautoriseret RevisionspartnerselskabCVR No 33 77 12 31

Mikkel Sthyr State Authorized Public Accountant mne26693

Maj-Britt Nørskov Nannestad State Authorized Public Accountant mne32198



topsoe In Brief


ourLeadership

FinancialStatements

AuditorsReport


topsoe In Brief


ourLeadership

AuditorsReport

FinancialStatements

Haldor Topsoe A/SHaldor topsøes Allé 1 2800 Kongens Lyngby denmark

tel. +45 45 27 20 00 cVR no. 41 85 38 16

topsoe.com

http://topsoe.com

Date post:	10-Jun-2020
Category:	Documents
Upload:	others
View:	11 times
Download:	5 times

Making performance - Haldor Topsoe - Annual r… · a process of searching for a suitable financial...

Documents